Consequences of becoming self employed end of tax year

Mary222

Oh wow, thank you! Now I understand (big achievement!),

That is immensely helpful and makes things easier for me.

So regardless of how much taxes or salary I have earned, I can make the following calculation with the self employment estimation.

For the self employment income earned in Feb and March, I will take off 20 percent on the remainder of £675 for each month.

Then I think its an additional 9 percent for the NInsurance 4?

So lets see:

£2598 (the total amount earned in self employment ) divided by two (two months) = £1299 self employment income per month

£1299 - 675 = £624

20 percent of £624 = £124

£124 x 2 = £259

£259 is how much I owe for my self employment taxes! (estimation)

That is alot better to what I said initially £753!!!

AND! I can claim a tax rebate...if i wish?

Please jump in if I have completely missed the boat!

I am so extremely grateful to you for your generous help! Thank you!!

PlutoinCapricorn

The first self assessment tax return is the worst!

Doing it online is much simpler than doing a paper form, and you have until Jan 31st 2014 to complete it - although it is best not to leave it until then.

I have the figures all ready on a spreadsheet, so I just copy them into the online form. I calculate tax due in advance, and usually it is within a few pence of what HMRC say I owe.

Mary222

Thats good to hear that doing it online is easier!

Its just that I like to prepare in advance and budget for any money earned.

It helps if I understand it to...!!

nomunnofun

Mary222 wrote: »

Oh wow, thank you! Now I understand (big achievement!),

That is immensely helpful and makes things easier for me.

So regardless of how much taxes or salary I have earned, I can make the following calculation with the self employment estimation.

For the self employment income earned in Feb and March, I will take off 20 percent on the remainder of £675 for each month.

Then I think its an additional 9 percent for the NInsurance 4?

So lets see:

£2598 (the total amount earned in self employment ) divided by two (two months) = £1299 self employment income per month

£1299 - 675 = £624

20 percent of £624 = £124

£124 x 2 = £259

£259 is how much I owe for my self employment taxes! (estimation)

That is alot better to what I said initially £753!!!

AND! I can claim a tax rebate...if i wish?

Please jump in if I have completely missed the boat!

I am so extremely grateful to you for your generous help! Thank you!!

Nearly there - there would be no National Insurance on those figures as the first £7605 of self employed profits in the TAX YEAR are exempt. You will not make this in profit for the two months. If it were me, I would do my self assessment as soon as possible after 5th April and get the first year out of the way - any refund will be calculated at that time - don't forget that you must declare all of your income for 2012/13, PAYE and self employed.

Mary222

nomunnofun the more I talk to you, the more good news I hear! So I dont even pay the 9 percent national insurance for those two remaining months of the tax year, where I was working in self employment:j
Can we talk some more, maybe you will tell me im in with a chance for winning the lottery!

Agreed in doing my self assessment asap, theres no point in me waiting and at least I can get it out of the way.

Thanks!!!!

warwicktiger

Just one side issue:

Have you registered with HMRC as self employed? You have three months from starting to trade as S/e to do this. You will find you should be paying £2.60 per week flat NI as well as the profit based percentage figure.

Mary222

Thanks Warwicktiger, I have registered. Although, I have not started paying the national insurance 2 contributions as yet. Do I wait for them to bill me after registering? And do I have to start paying them by a certain time?

Thank you for your help!

PlutoinCapricorn

HMRC should send you a pack containing a direct debit form for class 2 NI and a form for claiming exemption on the grounds of low earnings.

nomunnofun

Mary222 wrote: »

nomunnofun the more I talk to you, the more good news I hear! So I dont even pay the 9 percent national insurance for those two remaining months of the tax year, where I was working in self employment:j
Can we talk some more, maybe you will tell me im in with a chance for winning the lottery!

Agreed in doing my self assessment asap, theres no point in me waiting and at least I can get it out of the way.

Thanks!!!!

No problem - in a previous life I spent a lot of time explaining this to clients. However, there are many others on here who could have helped equally well. The lottery - perhaps there is another forum for that?

Mary222

Lovely, thanks Plutoin, I will excitedly wait at my mail box!