2012/2013 tax return for new self employed

nookey_bear

I have recently gone s/e and so am now thinking about having to submit my 12/13 tax return. My gross earnings from April 2012 - March 2013 was £37073

I 'think' I understand the tax implications but wanted to double check. Am I right in assuming:

a) I get tax relief on the 1st £8105
b) I get taxed at 20% up to £34370 (ie £34730 - £8105 = £26265, so 20% tax on £26265 = £5252)
c) I get taxed at 40% on anything above £34730 (ie £37073 - £34731 = £2702, so 40% on £2702 = £1081)

Can anyone comment on my calculations and put me straight if need be? If I wanted to reduce the impact of paying 40% tax, can I put up to £2702 into my pension? Are there any other ways I can reduce/prevent paying 40%?

If it helps, my OH has also just gone s/e (last week!) and will fall into the 20% bracket for 13/14

TIA

CLAPTON

you have 8105 tax free

the NEXT 34370 is taxed at 20%

so 40% tax starts at 8105+ 34370 = 42,475


however do bear in mind that you are taxed on your PROFIT and not your turnover

i.e Profit = turnover less allowable expenses.

you also pay NI on the profit too.

nookey_bear

ah ok, thanks for clarifying that CLAPTON. So I dont need to worry this year about falling into the higher bracket, maybe next year.....

PlutoinCapricorn

So this is the first self assessment for you? Take your time and ensure that you claim all the legitimate expenses you have incurred. You have until January 31st 2014 to complete the return if you do it online, although it is not advisable to wait until the last minute.

I am ready to go myself: I keep everything on a spreadsheet so I just transfer totals. I calculate the tax due myself in advance so I don't get any surprises.

nookey_bear

PlutoinCapricorn wrote: »

So this is the first self assessment for you? Take your time and ensure that you claim all the legitimate expenses you have incurred. You have until January 31st 2014 to complete the return if you do it online, although it is not advisable to wait until the last minute.

I am ready to go myself: I keep everything on a spreadsheet so I just transfer totals. I calculate the tax due myself in advance so I don't get any surprises.

I have kept a log of all my expenses so no worries there. I am actually part of a s/e partnership so our accountant does our company returns as well as our own private ones so I'll just send him the spreadsheet by end Oct and he'll do the rest.

I also calculate my own tax and put it aside in high interest acct so its working for me whilst its tucked away...

CLAPTON

nookey_bear wrote: »

I have kept a log of all my expenses so no worries there. I am actually part of a s/e partnership so our accountant does our company returns as well as our own private ones so I'll just send him the spreadsheet by end Oct and he'll do the rest.

I also calculate my own tax and put it aside in high interest acct so its working for me whilst its tucked away...

don't forget class 4 NI 9% over 7605

nookey_bear

CLAPTON wrote: »

don't forget class 4 NI 9% over 7605

yep, got it! cheers

nomunnofun

Importantly, as this is your first year, please be aware of the size of the tax bill due in January 2014. By that time you will have been self employed for 21 months and have paid precisely nothing in tax.

If your tax bill is £20000, for example, for 2012/13 you will have to have saved £30000 by next January as a payment on account will be due for 2013/14 on the same day.

Afurther payment of £10000 will be due in July 2014.

nookey_bear

nomunnofun wrote: »

Importantly, as this is your first year, please be aware of the size of the tax bill due in January 2014. By that time you will have been self employed for 21 months and have paid precisely nothing in tax.

If your tax bill is £20000, for example, for 2012/13 you will have to have saved £30000 by next January as a payment on account will be due for 2013/14 on the same day.

Afurther payment of £10000 will be due in July 2014.

Yes I'm aware of that but thanks for reminding me. My accountant is v good and has helped me with working out the advanced payments due for July 2014 when I pay my bill in Jan 2014

NymanLindenAccountant

nookey_bear wrote: »

I have kept a log of all my expenses so no worries there. I am actually part of a s/e partnership so our accountant does our company returns as well as our own private ones so I'll just send him the spreadsheet by end Oct and he'll do the rest.

I also calculate my own tax and put it aside in high interest acct so its working for me whilst its tucked away...

Presume your accountant should be able to deal with your queries? Or is he charging you for that time?

nookey_bear

NymanLindenAccountant wrote: »

Presume your accountant should be able to deal with your queries? Or is he charging you for that time?

No he doesnt charge 'per enquiry', just an annual charge for our returns. He looks after the business accounts too and has dealt with one of my partners for many many years so there is a great level of trust with him.