Tax seems very high

InsertWittyName

nathand wrote: »

It was relevant. You're already paying tax and will have used up most/all of your tax-free allowance. Therefore you're being charged 20% tax and 9% (pretty sure that's the rate for SE) NI Class 4.

There's no Class 4 NI at £3k, think it kicks in around £7,225.

ravravrav

I agree: it is relevant. However it was a genuine mistake that I didn't provide those details when asking the original question. As I said above there is a link on the website which breaks down how the tax is worked out. Only the student loan proportion confuses me a bit but I will phone HMRC and ask them myself.

fluffpot

welcome to the wonderful world of self employment!

Good luck with your venture - at least you have made a profit - many start up's don't in the early years.

Queries

Dear Ravravrav, just a thought, regarding self-employment, are you keeping all the expenses relating to it and book-keeping accordingly? It's is amazing how many self-employed prople can lower their tax payments by charging business-related expenses back. For example, do you use a car for your self-employment? Is it solely used for it? If you use it only partly, say 25% then you can put 25% of petrol used, 25% mot/maintenance costs, 25% of insurance costs as a legit expense (providing all receipts, etc. are there for back-up), as well as 25% depreciation on the vehicle (now called write-down-allowance). Do you need to buy additional clothes, soley, for your self-employment? (Another legit cost.) These are just examples. Remember, Gross Profit, Less purchases/expenses (for business) gives a Net Taxable Profit. The very best of luck in all that you do!

Acc72

As a rough barometer, as you are working - if you received a £3,000 pay rise how much additional tax would you expect to pay ?

As somebody else has said, just make sure that you are including all expenses, just avoid tales from a "bloke down the pub" and either spend a few hours on the HMRC website for info. or consult a local accountant for an hour or so to set you on the right track.