Completing self assessment??

John_Pierpoint

Lea74 wrote: »

Thanks John, I will probably need to alot of attempts. Will be in touch in Jan 2013 - lol!!

The tax year runs from 06April to 05April - you can play accounting games with the accounting year of your self employment business, but I would keep it simple in your case and align your accounting year with that of the tax man.

Have you signed up to pay (or be exempted from) class 2 National Insurance?

http://www.hmrc.gov.uk/working/intro/class2.htm

When did you issue your first invoice? (Like all good businesses you do bill people promptly don't you?:D)

Lea74

John_Pierpoint wrote: »

Do it on-line, you get longer to get your figures in, you can play "what if" games for weeks until you get it right; correcting the errors as you go along. [Do a skeleton from start to finish first and submit it for (lots of) error correction to prove the system is working for you]. Finally you submit your masterpiece and get a an immediate calculation.
No more wondering if the "postman" has lost the paperwork.

[Beware - the statement that HMRC never send emails is not true - if you really get the initial attempt to register to use the on-line system rejected you could be sent an email]

I am not sure I understand what you mean by playing 'what if' games until you get it correct?

When you say a skeleton form, do you mean a paper copy for practice and then submit it? Lots of error correction?

I am sure once I have done one SA, the next one will seem like a breeze

John_Pierpoint

What I mean is put in your name address NINO and joke figures for your incomes, your savings interest etc etc, then fill in the closing information, like the bank account for the refund (you and I wish) then get your efforts validated. You will get some errors but you will have proved to yourself that you know how to use the software.

Then you have until the end of January to get all the figures correct, though aim for this side of Xmas, as the system can get overloaded in January.

There are lots of thresholds in the tax system these days - it is the worlds second most complex tax system (India is said to the worst - we taught them how to do it). So you might need to find what would happen if you earned and extra £x or had time off and earned £y, you can play about to see what happens. For example people on top of the tax system can make decisions like "shall I put an extra £1000 into my pension".

You are much more in charge of the tax system than hanging on the phone waiting to be "triaged" by a call centre, that knows less than you do.

Lea74

So my question is about class 2 NIC.

My estimated income from self employment will be between £4000 and £5500 (i am not sure at the moment).

Should I register to pay Class 2 or do I wait to be told I have to pay it?

Should I register for exemption from class 2 NIC?

If I go over the threshold for class 2 NIC and havent paid will I be then requird to pay it?

If I pay Class 2 and then dont go over the threshold will I get a refund on what I have paid?

Sorry I hope I am making sense.

Thanks

lovinituk

You have to register as self employed when you start trading which will then trigger a request to pay Class 2 NICs. You can apply for the low earnings exemption at that point if you wish. I decided to pay it anyway even when my earnings were low. Its only around £10 - £12 a month and it ensures that your contributions are up to date and you don't have a gap.

Lea74

lovinituk wrote: »

You have to register as self employed when you start trading which will then trigger a request to pay Class 2 NICs. You can apply for the low earnings exemption at that point if you wish. I decided to pay it anyway even when my earnings were low. Its only around £10 - £12 a month and it ensures that your contributions are up to date and you don't have a gap.

Thanks. I registered to be self employed when I started in May this year. I havent received anything as yet - either to pay or exemption. I am not sure if this is because I was self employed previously and then stopped and then started again. I had an exemption the first time, but not so far this time.

I am employed part time as well so already pay NI through my employer so not sure if this is making a difference. I may just give them a call to check.

lovinituk

Lea74 wrote: »

Thanks. I registered to be self employed when I started in May this year. I havent received anything as yet - either to pay or exemption. I am not sure if this is because I was self employed previously and then stopped and then started again. I had an exemption the first time, but not so far this time.

I am employed part time as well so already pay NI through my employer so not sure if this is making a difference. I may just give them a call to check.

Might be worth giving HMRC a ring. If you are paying NI through your employment then its probably worth going for the exemption but check when you phone.

Lea74

lovinituk wrote: »

Might be worth giving HMRC a ring. If you are paying NI through your employment then its probably worth going for the exemption but check when you phone.

So phoned HMRC - cant believe how long you have to wait. Anyway I was told that I would get a six monthly bill, and next bill next month.

I have done a quick review of my projected net profit and I will probably be below the threshold, so feel like a bit of an idiot now and should has asked for an exemption. I was told however that if I paid NIC 2 and then was below the threshold I could ask for a refund, so maybe I should consider it a little bit of saving :rotfl:

I would rather pay it and not be landed with a bill later.

Can you ask for an exemption at any point, for example if in Feb 2012 next year there is no way I will go over the threshold can I then ask for an exemption?

Lea74

Okay so I am like a bone with this one lol!! Maybe I should keep paying the class two NI as I have been in the UK for 8 years now and whilst retirement is a long way off (long way) I have only been contributing for 8 years so this would help towards my state pension right???

grey_gym_sock

for each tax year, you get a year's contributions counted towards the state pension, or none. so there's no point in paying Class 2 for self-employed, providing you have a full year's contributions from employment. if your employment during the year has gaps (or isn't high enough to count in some weeks or months), then it would be more complicated ...