What happens to tax if in full time employment and Registering as sole trader

asoe209

Good afternoon all. I have a question about setting up as a sole trade while also being in full time work. I have been trying to wrap my head around this for some time now but just keep confusing my self.

So I work fully time 37.5 hours a week. And I want to set up an online business. My start up money has been very small so in the 1st year I don’t expect to make much money back at all.

I’m think off the top of my head from the business I will have around £1000 profit at the end of the year if that. All the work for this business will be done part time so after my day job in the evening I start work on the online stuff. As well as a few hours on the weekend, that’s how is been the lst few weeks.

What I have been getting confused and worried about it the amount that will have to be paid in TAX and NI.

Some people have said that all the tax is paid through my work any way so don’t need to worried and that I will then only have to pay tax on the profit of the business.
Is this the case.

I have tried to talk to HMRC and Accounts and both have just said to register as a sole trader no one has been able to give a clear answer as to how being in full time work and trading will effect my taxes

I’m not sure which class of NI I come under 2 or 4

I don’t want to get caught short and have to be scrambling for money that I don’t have to pay tax and make my self worse off than when starting.

HappyMJ

20% extra tax on that amount assuming you aren't in a 40% tax bracket...No extra NI as earnings are too low. You can choose to opt out of paying the weekly amount if you want to. You would need to earn more than the LEL (lower earnings limit) to pay any. The contributions are not cumulative...so you could have 5 part time jobs one on each day of the week and never actually pay any NI.

asoe209

well my income is around £19,000 and about £22,000 if you also count london waiting/ high cost bla bla lol.

I pay about £450 tax now a month.

HappyMJ

asoe209 wrote: »

well my income is around £19,000 and about £22,000 if you also count london waiting/ high cost bla bla lol.

I pay about £450 tax now a month.

On £22,000 a year you should only be paying £231 a month in income tax....and another £144 in national insurance contributions.

What's your tax code?

lazer

asoe209 wrote: »

Good afternoon all. I have a question about setting up as a sole trade while also being in full time work. I have been trying to wrap my head around this for some time now but just keep confusing my self.

So I work fully time 37.5 hours a week. And I want to set up an online business. My start up money has been very small so in the 1st year I don’t expect to make much money back at all.

I’m think off the top of my head from the business I will have around £1000 profit at the end of the year if that. All the work for this business will be done part time so after my day job in the evening I start work on the online stuff. As well as a few hours on the weekend, that’s how is been the lst few weeks.

What I have been getting confused and worried about it the amount that will have to be paid in TAX and NI.

Some people have said that all the tax is paid through my work any way so don’t need to worried and that I will then only have to pay tax on the profit of the business.
Is this the case.

I have tried to talk to HMRC and Accounts and both have just said to register as a sole trader no one has been able to give a clear answer as to how being in full time work and trading will effect my taxes

I’m not sure which class of NI I come under 2 or 4

I don’t want to get caught short and have to be scrambling for money that I don’t have to pay tax and make my self worse off than when starting.

You would pay tax on your self emplyed income - probably via self assessment every year.

National insurance you would need to fill in a form for exemption due to small earnings

http://www.hmrc.gov.uk/forms/cf10.pdf

Even if your earnings went above the threshold -- you can still apply for deferrment of National insurance contributions

asoe209

my tax code is 810L CUMUL

numbers from Jan Pay Slip
Salary £19077.00
Basic Pay £1589.75
High Cost Atra £336.33

Taxable Pay
19260.80
Deductions 405.25

Take Home 1520.83

HappyMJ

asoe209 wrote: »

my tax code is 810L CUMUL

numbers from Jan Pay Slip
Salary £19077.00
Basic Pay £1589.75
High Cost Atra £336.33

Taxable Pay
19260.80
Deductions 405.25

Take Home 1520.83

You earn £23,113 a year....and according to my calculator you should pay £250 in tax and £155 in NI contributions totalling £405.25 every month...so it's correct.

asoe209

well that's some thing then.

CLAPTON

the tax and NI on your fulltime job will be unaffected by your self employment (SE)

in principle, you will pay tax and class2 NI and class 4 NI on your SE earnings

given your estimated earnings, tax will be 20% and you will be exempt from NI


if you start your SE after 6th april, you will need to complete a self assessment form (or online) and pay the tax by end of January 2015

asoe209

So will it be best for me to just wait until the new tax year now before registering as self employed.

Is is there part time self employed? im assuming there is not.

How comes Ill pay class 2 and 4? i thought it was one of the other.

HappyMJ

asoe209 wrote: »

So will it be best for me to just wait until the new tax year now before registering as self employed.

Is is there part time self employed? im assuming there is not.

How comes Ill pay class 2 and 4? i thought it was one of the other.

It's both...If you earn more than £5,595 from self employment then you pay £2.65 a week Class 2 contribution..If you then go on and earn more than £7,605 then you pay 9% Class 4 contributions on the excess income until you earn £42,475 then it is reduced to 2% on anything you earn over that.

As you have said your estimated earnings will be under £5,595 you can opt out. you will get your NI credits through your normal PAYE job.