Self employed and employed how much tax would I pay?

nealnomoney

Can i offset a self employment loss against emloyment income ?

Bean_Counter

nealnomoney wrote: »

Can i offset a self employment loss against emloyment income ?

You may be entitled to make a claim under section 380 TA 1988 (off the top of my head), but careful how this may impact on other reliefs and allowances that you may have such as taper relief on capital gains.

daisychain13

Thanks very much Bean Counter - you're a star!

Bean_Counter

daisychain13 wrote: »

Thanks very much Bean Counter - you're a star!

Hopefully you read the bit above about needing to register with HMRC within three months of starting.

Try this link to HMRc website about starting a business:

http://www.hmrc.gov.uk/businesses/tmastarting-up-in-business.shtml

and this one to the government's business link website:

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073858805&r.s=tl

Let me know if you need more assistance.

Whitehorse_2

Hi all
I'm wanting to do a similar thing. Last time i jumped into self employment with no savings and no other job and no idea of what I was really doing (!). However despite not earning a living from what I was doing self-employment is now the only way to go for me. The answer given by Aark above is very helpful - thanks! One further question though...

I roughly earn arouund 200 a week from my employed job and I'm aiming to earn £50 a week extra in self-employed (hopefully rising £50 per week every six months or so until I am earning the £250 a week from self employment so I can leave my regular day job and concentrate on my own business).

From what I understand from the above, my income less allowable expenses and the basic allowable amount I can (the 5000 odd figure) is taxed jointly at 22%. So does that mean that when I start earning from self-employment I have to tell my employer so that they tax me at 22% instead of what they usually do? Meaning that both my employed and self employed income are combined and any amount over 5000 is taxed at 22%?

If that's the case then I don't think I would tell my employer until I actually start earning money because being taxed at 22% on such an already small income wouldn't be viable.

Also - another question - what counts as appropriate when filling in allowable expenses for rent and utilities when you work from home. I'm filling in my tax return from last year and I can't remember how I previously worked it out and I can't find a site that accurately gives me a formula. The room I use isn't soley for business so I think I divided my utilities and rent by 3 (I have two berooms and a living room - I don't include the bathroom and kitchen) and then divided again by 40 which was the average amount of hours I was working self employed. I included the whole of my broadband which doesn't include phone calls as my business was internet based as it will be in future. Does this sound fair and right?

Advice welcome. I want to know about all this tax stuff but my eyes glaze over when I try to study it! I'm not one to be beaten though so I will make an effort to learn it.

Thanks

Bean_Counter

Whitehorse wrote: »

So does that mean that when I start earning from self-employment I have to tell my employer so that they tax me at 22% instead of what they usually do?

No. You are still entitled to your basic allowance, and the best way to receive that it through the PAYE coding. Hence you get the benefit throughout the tax year of your nil rate band.

Anyway, most employers would not be happy if they thought your efforts at work were being distracted by your self-employed activities.

Kee pgoing the way you are with nyour employer. You woulkd then be taxed at 22% when you submit your self assessment return and start paying tax on that.

Whitehorse_2

Hi Bean Counter - many thanks for your reply. Oh that sounds better than I thought then :-)

Bean_Counter

Whitehorse wrote: »

Hi Bean Counter - many thanks for your reply. Oh that sounds better than I thought then :-)

No problem. Let me know if you have any other queries or if anything is not clear.

EagerLearner

Hi Bean Counter, can you help me too? I work self-employed as a virtual pa/ secretary, and also attend client premises when necessary.
I have listed below what I have so far been keeping receipts for:
- Telephone & Broadband
- Mobile
- Electric / Gas Water / Council Tax
- Cleaning materials - bicarb of soda, baking soda, dishwasher tablets, cleaning spray, toilet roll, air freshner
- Staff welfare - Tea, coffee, sugar, milk, juice
- Computer peripherals - ink cartridges, paper, stationery, blank cd's for data, e-mail subscription
- Advertising - local adverts, website domain costs, webspace costs
- Marketing - vouchers for referrals (ie anyone that gets me business gets a voucher)
- Travel - yearly bus pass, train costs
- Postage
Anything else you can think of that in this line of work could be claimed for?
Many thanks in advance.

Bean_Counter

EagerLearner wrote: »

Hi Bean Counter, can you help me too? I work self-employed as a virtual pa/ secretary, and also attend client premises when necessary.
I have listed below what I have so far been keeping receipts for:
- Telephone & Broadband
- Mobile
- Electric / Gas Water / Council Tax
- Cleaning materials - bicarb of soda, baking soda, dishwasher tablets, cleaning spray, toilet roll, air freshner
- Staff welfare - Tea, coffee, sugar, milk, juice
- Computer peripherals - ink cartridges, paper, stationery, blank cd's for data, e-mail subscription
- Advertising - local adverts, website domain costs, webspace costs
- Marketing - vouchers for referrals (ie anyone that gets me business gets a voucher)
- Travel - yearly bus pass, train costs
- Postage
Anything else you can think of that in this line of work could be claimed for?
Many thanks in advance.

Hello EL,

The main principle for an item to be tax deductible for a self-employed person such as yourself is that it must be "wholly & exclusively" for the business.

I don't know if you have someone else do your tax work for you and whether they disallow some of these items, but on the face of it (unless I am missing something) I struggle to think how the cleaning materials for example are "wholly & exclusively" for business use. Similarly for the travel costs, do you keep records of how much this is for business use and how much for travel and then restrict the tax deductible element accordingly? Some of the others might fall into this category too.

I know this is the not what you were looking for - you wanted more tax allowable items, but you get my professional opinion all the same.

On the more positive side, without knowing exactly the type of costs you incur, I guess you have been pretty thorough. The only other items I could think of would be:

1. Claiming capital allowances on computer / printer
2. Do you have a car that you use for business?
3. Any professional subscriptions you have?
4. Any training course you go on to keep your skills up to date?
5. Any professional fees such as accountancy / tax practitioners?
6. Any anti-virus etc costs for your computer?

The best idea is to think about the "wholly & exclusively" element to anything you purchase.