Working full time plus self employed making a loss?

delb21

Hi,

I currently work full time and was thinking of starting a self employed business to run at night and weekends.

I was reading about self assessment etc and I read that you can use self employed losses to reduce your income tax bill.

My question is, if I make a loss self employed can I pay less PAYE through my employment?

Cheers, Del.

warwicktiger

Short answer = no.

Make a loss on your self employment and you reduce your tax liability, so probably end up with a roll over tax credit for year two, then if continued S/E loss a refund in year 3

Your employed tax code would remain the same as if you were only employed so tax would not change.

PS you might be grateful for this as your employer would not then know about your second occupation!

delb21

Okdok, thanks for that.

A follow up to this is I am currently receiving £32k pa and I'm almost on the 40% tax bracket. If I was to make a profit self employed would I be taxed at 40% right away?

warwicktiger

I'm sure you would, depends on your trade though, if it is labour only, eg "consultant" you would have few start up expenses, but if not then I'm sure you or your accountant could find ways to minimise profits!

heretolearn_2

A follow up to this is I am currently receiving £32k pa and I'm almost on the 40% tax bracket. If I was to make a profit self employed would I be taxed at 40% right away?

You can have an income of 40,116 before you move into the 40% bracket (using new threshold/allowance from next month).

Your income will be your salary plus your self employment profit. If you make more than that, you'll move into 40% bracket. But you do understand you only pay 40% on the part that is over 40,116, not the whole of your income, don't you?

I don't know why people stress about moving up a tax bracket, it just means you are earning more and bringing home more, and what's bad about that? Sure, you don't get to keep quite as much of the amount that's over the threshold as you do the rest of your income, but keeping 60% of something is better than 100% of nothing!

Anyway, your PAYE won't be effected by your business. You need to do a tax return (self assessment) once a year to declare all your income and pay the tax due on the self employment.