Self employment and Tax

Nicklt

Hi,

Don't know if this is the correct place for this but anyway,

My Girlfriend works 10 hours a week at a shop plus around 10-15 hours per week is a self employed role from home.

She earns around £400-£500 a month from the SE job and around £250 from the shop job. She has registered as self employed and is just sorting out her tax return thingy.

Will she have to pay tax on the SE job? with the combined income still being less than the tax free allowance.

PS - She is currently paying emergency tax on her shop job earnings.

Thanks.

Lovelyjoolz

The simple answer is 'possibly'.

If she is earning £750 a month then she is earning £9,000 a year which is over the threshold of the personal allowance.

However, if she incurs expenses in her SE role that, when deducted from her profits, drop her down to below the PA threshold then she won't pay tax. She may also find she is entitled to a tax refund.

My main worry (if I were her) though, is why is her employer using a base rate tax code for her? Did she not give them a P45 when she started working for them?

She should ring HMRC and run through her projected earnings with them and ask them to issue a tax code notice to her employer asap.

Nicklt

She didn't have a P45 when she started as she didn't have previous job nor did she claim JSA.

She has spoken to her employer about the tax thing and they brushed it off, i will tell her to speak to HMRC.

Also, when does the tax return has to be completed? she text me saying she got a letter from HMRC saying she owes £100, i presume this is a fine for late submission, but she had a letter about a month back saying it did not need to be submitted until at least Oct this year.

Lovelyjoolz

The employer is only allowed to apply a tax code that is advised to them by HMRC. If HMRC send out a revised tax code the employer must apply it, but they won't go to the trouble of chasing one themselves. It's up to your girlfriend to speak to HMRC.

Tax returns must be done every year. For the tax year ended 5th April 2012, the tax return should be submitted by October 2012 for paper returns or January 2013 for online returns.

If she has received a £100 fine then she has failed to submit a previous years tax return, i.e. for year ending 5th April 2011.

Nicklt

Thanks Joolz,

She only started this SE job in Sep-Oct last year.

She doesn't always read letters fully so it may just be a case of a letter saying the WILL fine £100 if it is submitted late. Ill look at it when im home.

Lovelyjoolz

Or it could be that HMRC have got their facts wrong! If the letter IS a fine, check with HMRC what date they have for SE work commencement date.

Nicklt

The letter was for NI, :money:

Which i think shell be exempt from as she pays this through her Shop job.

Savvy_Sue

Nicklt wrote: »

The letter was for NI, :money:

Which i think shell be exempt from as she pays this through her Shop job.

She's not exempt because she pays this through her other job, however if her earnings from self employment are low enough (under about £6000 pa, I don't know the current figures) then she can apply for a Certificate of Exemption.

If her earnings from s/e are above that, then she needs to pay about £2.50 a week, even though they won't do much for her.