Hybrid self employed / part timer

silk_2

Hi all,

I've scoured the internet for answers but can't find any about my particular circumstance.

I've slashed my salary and working hours in half in order to free up half the week to work on my own projects - writing PC/mobile games.

So I'm self employed, living off the money that I get from my part time work (and my partner's income as well).

I wondered if there are any kind of tax breaks I should be applying for, or that kind of thing? I'm aware that if you are self employed you can get things that are needed for the business VAT free (by claiming the tax back) but I think I'm not eligible for that as long as I'm working?

Has anyone got any sort of insight into this, or can you advise where I'd at least ask these questions?

bengalknights

You can check to see if your entitied to any benefits via entitledto

Horace

Have you registered your self employment with the HMRC? It matters not that you have a part time paid job as well.

You can only claim VAT back and charge VAT if you are VAT registered - if you are not VAT registered then you do not mention VAT at all.

podperson

Do you use your full tax allowance on your part time job? If so then unfortunately you will be on 20% for the second one.
You can only claim VAT if you are VAT registered and if you are just starting out then it's probably not worth doing that yet.
What you can do is class your self-employed hours with your part-time hours to claim working tax credits if you don't already.

tyllwyd

What level of income are you hoping to receive from the self-employment?

Unless your turnover is a substantial amount (the threshold is around £70K pa), you don't need to register for VAT, so that isn't likely to affect you at the moment. But you should be keeping a record of all your allowable business expenses, which you can set off against your income when it comes to filling in your tax return. You can include a certain amount for the costs of running your home office as expenses (there are loads of threads on how to calculate or estimate a suitable figure, but a lot of people go for £3 per week).

I always get confused over national insurance, but if I've understood it correctly you pay national insurance separately for your employment and your self-employment, so you should make sure you're paying the right amount.
http://www.nidirect.gov.uk/employed-and-self-employed-tax-and-national-insurance (edited to say I've realised that's a link for Northern Ireland, but it gives the idea).

Mistral001

Registering for VAT is another layer of adminstration. If you are registered, you have to charge it. If you sell to VAT registered companies then it does not matter to them as they will be able to claim it anyway. If you sell to nonVAT regsitered companies and individuals your prices will be 20% higher and nobody can calim it back. You will have to send the 20% off to HMRC at regular intervals as well, which can become a problem for some if they have cashflow problems from time-to-time..

I am not VAT regsitered because of the the admin problems and the fact that I deal mostly with individual clients and not VAT registered companies, but the downside of not being registered is that many people, I think, do not regard me as a serious mainstream business.

By the way the items you will be able to reclaim VAT on if you register could be limited. You could reclaim for your computer and any software an mobile phone that you buy and use for the business and stationery etc.

Savvy_Sue

If your s/e earnings are low enough, you can ask for an exemption from paying NI on those earnings. Ask when you register for self employment with HMRC.

silk_2

Is it even worth registering as self employed? My own "business" isn't bringing in any income at all, in fact it's costing me money for software licenses, hardware etc. If/when I publish a game, I might start to recieve profit - but we're way off that stage at the moment.

I don't think I need worry about N.I. as my employer is still sorting it, I am still on PAYE.

Basically I am on 16K p/a for my part time job and 0k p/a for my self employed work.

I guess I have two things to ask:

1, are there any legal obligations I have right now? I don't think so, as I'm just a "bedroom coder" writing software in my spare time on my own income.
2, Can I not claim any kind of tax back on my part time income given that it is supporting my self employment?

It's good to know I *can* register self employed even in my part time working situation, but I guess I have to fathom if it's worth it. I do need to buy a laptop and tablet for testing my games so hmm.

Mistral001

Are you actually trading as a self-employed gamer. If you are not acting in a commercial way like contacting prospective customers or getting commissions or buying equipment soley for you business then I cannot see how you would have any legal requirement to "register" with anybody. Even if you have bought equipment and do not start trading until later down the line you can still bring the value of that equipment into you first years business accounts and not miss claiming it as an expense as far as tax is concerned.

I suppose it is a bit like novelists who start writing their first book in their spare time but work for a publisher by day.

tyllwyd

Lots of businesses make a loss in their first few years and you should be able to set that loss off against the tax you pay in employment. There is a bit of information here
http://soletradertocompany.co.uk/TradingProfitReliefs.aspx