Self employed tax returns whilst employed

tbathgate

Hi All,

I am looking for some advice. I have just started up my own web design business and i am doing this on top of my current job which i pay tax as normal.

My question is, how do i go about registering for being self employed and how will this work. I have been in business for about a month and i now i have three months to register before i get penalised.

Will it be really complicated for filling in self-returns. Or will it simply be a matter or saying that my tax allowance is on my main job and that any earnings on this job are payable at basic rate tax?

I do plan to go full time with my business in the end but not until i have a better reputation and have a regular income from it.

Can anyone shed some light? I'd hate to make a mistake and end up mucking up my tax code and all that!!!

Thanks in advance

Tom

Murdina

Your tax return will return all sources of income - you will show employment income on the special pages for that and your self employed income on the special pages for that. Then the whole lot is added up to work out your tax bill with credit for anything paid under PAYE. No reason why your employment income should not continue to have all your allowances coded against it.

tbathgate

Murdina wrote: »

Your tax return will return all sources of income - you will show employment income on the special pages for that and your self employed income on the special pages for that. Then the whole lot is added up to work out your tax bill with credit for anything paid under PAYE. No reason why your employment income should not continue to have all your allowances coded against it.

Really? That seems pretty easy. And can you do this online?

I was expecting some long drawn out complicated process but that seems ok.

I take it as well that you would just explain this to the IR when you call them to register as self employed?

Thanks

Tom

Murdina

Well it's easy in that you register and thereon in they send you a self assessment return and yes you can register to complete it on line. Yes tell them you continue to be employed and they may in a moment of efficiency actually send you the relevant employment pages without asking (not an issue if you do it online).
The hard bit is in completing the forms and the knowledge of the tax system generally - basically as I see it once you are within self assessment it is all down to you; mistakes are your fault and you have to keep on top of doing returns on time, paying on time etc etc. Read the notes that accompany the relevant pages carefully. Keep excellent records and put money by to meet tax payments. Send your return in in time for HMRC to work out the tax for you.

Murdina

by the way don't forget about national insurance. You will be asked to pay class 2 by direct debit. Class 4 is due on your self employed income. Class 1 is payable on your employment income and if this exceeds certain thresholds you may be able to claim exception from paying class 4.
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/ReclaimingTax/DG_10014924
may explain it better than I can (apologies if I have not actually created the link).

tbathgate

Hi there,

Thanks so much for this, i really appreciate your help with this.

Will sort it out tomorrow i think.

Thanks

Tom