self assesment tax help

JohnMess1

Hi All,

I am currently both employed and self employed. At my main employed I estimate I will earn 8k for the year (its only part time) and around 6.5k for my self employed.

I am trying to work out my tax due to make sure I have enough money set aside. So my calculation looks like this

14500 - tax allowance £8190 (2012 - 2013)

Taxable pay £6310.

So this year I have put aside 20% of all my pay from the selfemployed side.

I do have expensives for the year so do the expensives come off first then you pay tax on whats left or are the expenses tax deductable meaning I take the expenses off the tax I am due on the whole amount above?

Any help is greatly appreciated thanks

nomunnofun

It was fine until the second last paragraph. If I were you I would set aside 20% of your self employed income after expenses right fro the start of your self employment - should be adequate.

anselld

Income minus Expenses = Profit.
Profit is what you are taxed on.

Don't forget Class 2/4 National Insurance for Self Employment.

JohnMess1

nomunnofun now that I have re read it I see what you mean. Anselld thanks thats exactly what I ws after.

I have bought equipment is that considered an expense or annual investment. If it goes into AIA is it still the same calculation you have posted above? so if I am right you would add expenses and AIA deduct the amount from the profit then pay tax on what is left?

Hope I have made myself clearer. cheers for the answers.

John424

Agreed with the replies, however I am not too sure what level the class 4 NICs kick in these days, a long time since I passed my Accountant exams so your £6.5k might be below the threshhold, anyone else?

anselld

JohnMess1 wrote: »

nomunnofun now that I have re read it I see what you mean. Anselld thanks thats exactly what I ws after.

I have bought equipment is that considered an expense or annual investment. If it goes into AIA is it still the same calculation you have posted above? so if I am right you would add expenses and AIA deduct the amount from the profit then pay tax on what is left?

Hope I have made myself clearer. cheers for the answers.

Yes same calculation, AIA (within the limits) is just another expense.

JohnMess1

Perfect thanks anselled that gives me a much better understanding of how much tax I will be due cheers

John424

00ec25 wrote: »

as you can work a forum, why not check your facts before posting?
http://lmgtfy.com/?q=hmrc+rates+and+allowances+2012

Not sure if you're looking for a reaction or just quite rude.

John_Pierpoint

What was the start date of your self employment?

You get a "honeymoon" period until your first tax return is processed BUT then the system expects you to make additional payments on account.
The year or part year ends on 5th April and the tax becomes overdue on 31st January the following year. The tax man isn't prepared to wait that long in future so expects you to make payments in January and July in future "on account" to avoid extending credit to you.

It is possible to play games by having your accounts drawn up to different dates, but it is not really worth the hassle for a small simple situation like yours. Y you might as well fit in with the fiscal year accounting dates of HMRC.

ourtrudes

Hi,

My partner has just gone self employed opening his own Electrical Contracting company. He is currently a sole trader and prior to this, we were in receipt of Job Seekers Allowance. I am now in charge of book keeping and accounts have a few questions.
In order to keep accounts for April 2013- April 2014, I have been told to put our fortnightly JSA payments down as income as these are apparently taxable. As these can be taxed, am I also able to put forward the fuel receipts used to travel to and from the job centre on these dates? Also, for a good two three months prior to our going self employed, my partner was rallying around daily looking for work and future clients in turn, building the clientèle we needed to do this. Can these fuel receipts also be used? My final question being, as we wanted to start small and not venture into much debt by getting set up loans, we were lucky enough to have a family member borrow us the money to purchase some of the necessary equipment needed to start this business. Some of the items were purchased by this family member and the invoices have their names on them. Can I still use these? Even though they have not been made out to the business? Any help greatly appreciated. Thanks!

John_Pierpoint

Did you pay the relative interest on the loan? Is that relative a tax payer?
Do you have a partnership agreement written down or are you both self employed and it is a sort of hand shake thing based on two self employed people mutually assisting each other with their individual self employed businesses?

I am not sure how looking for self employment might have effected your status as being available for employment and qualified for JSA [A lot of people drop out of claiming JSA with its prospect of being stuck in minimum wage jobs (on zero hours contracts ?) for an indefinite future; so they go "self employed" able to cover the class 2 NI stamps and earn more than the JSA, while still able to claim working tax credits if needed.]

For the more "street wise" advice on coming off JSA to create a "business", you could try one of the other sub forums here.
“self employed tax credits” site:forums.moneysavingexpert.com
“JSA and self employed ” site:forums.moneysavingexpert.com