Dreaded Tax

cobbychops

I am a newbie here. Just going through the forums, and having just paid my second payment on account for the tax year, I am trying to make sure I have enough put by for this coming January.

I work as an NHS secretary full time, wages paid to me by the hospital.

I also work as a self employed medico-legal secretary (since February 2010). I undertake work for one consultant. I invoice him for the work I do at the end of each month - invoicing him for the work that I do, plus stationary etc, for which he reimburses me in full. I am registered with HMRC as self employed for the medico-legal work.

Now so far, having managed to make mistakes on two of my tax returns (overpaid on both occasion, necessitating a fairly lengthy wait to get my refunds), I wanted to make sure I have enough tax put by for the upcoming January 2014 payment.
(Boiler and replacement car meant that I did what I said I would never do, and dip into my tax account money - so now I've lost myself a bit and need to get back on track).

My self assessment statement so far is a hotch-potch of balancing payment/repayments so far, so it's not easy for me to understand the figures.

I earn £22k in my NHS post, and on average about £11k per year as self employed.

I just really wanted to know what others would be putting aside for tax in percentage terms based on these total earnings? I've seen figures ranging from 20-35%. I don't want to be putting 35% away if I don't have to, but at the same time, don't want to be putting too little away so that I'm hit with a shock trying to make up the shortfall near the end of January when I do the self assessment online.

Any advice from you lovely people would be much appreciated.

Thank you

agrinnall

I would have thought nearer to 20% than 35% on those figures. The tax rate on the £11K SE earnings will be 20%, but I'm not sure whether there is any need (or requirement) to pay NI on top of that.

cobbychops

Hi agrinnall, thank you for your reply.

I pay NI via direct debit monthly to HMRC for my self employment. I was exempt initially as I didn't earn enough, but now I do pay.

I've just had a bad experience by getting my first tax return wrong and ended up overpaying.

The figures, with the payment on account just really throw me, and it's just unfortunate that when I've called HMRC to ask for help with the tax returns, the advisors I have spoken to haven't had much patience, so now I'm just filled with dread each time tax return time comes around.

That's great though, thanks very much for helping with that.

suso

For tax you'll need to put aside 20% as your personal allowance is being used by your main job I presume.
For NI - The threshold this year is £7755.00 and then you pay at 9%

This is in addition to the class contributions you are paying at the moment.
Remember the figures are your profits, not your turnover

Do you have a Student Loan ? you'll need to pay this on top of tax + NI

jennifernil

You could get an accurate amount by doing your tax return now, no need to wait until January. You will not be asked to pay any earlier.

However, as you are making POAs, unless your income has risen since the previous year, there should be little or no balancing payment required, and your POAs will be much the same as this year.

Savvy_Sue

If you feel dread and have been getting things wrong, it might be well worth the cost to use an accountant for at least one year, so that you gain confidence.

You'll also get a check of what expenses you can offset against your s/e income, and that might bring down your tax and NI liability.

And they would make sure you weren't claiming expenses which would be disallowed if HMRC investigated your claim.

I'd phone a couple to get a quote, most would give you a free half hour which would help you get an idea of how much help they would be.

I am not an accountant, but it's what I did when I was s/e years ago. Once I knew what my income and expenses looked like, I did it myself.

nomunnofun

I do not wish to be too alarmist but I would have grave doubts as to the self-employed status of the op. There is a marked difference between being self employed and being paid on a self employed basis as appears to be the case here.

The phrases: 'work for one consultant', 'invoice him for the work I do at the end of each month', 'plus stationary (sic)etc for which he reimburses me in full'

In the course of a self-employed person these are unlikely situations - what self-employed person is paid monthly, has one client and bills for stationery each month? The following is informative.

http://www.hmrc.gov.uk/working/intro/empstatus.htm

Around two years ago two orthopaedic consultants in an associate's accountancy practicewere obliged to place their secretaries of long standing service on PAYE and HMRC agreed to 'only' go back six years. It still proved expensive.

McKneff

Where does this 9% NI come from, I thought it was 12%

nomunnofun

McKneff wrote: »

Where does this 9% NI come from, I thought it was 12%

Class IV self employed rate

CLAPTON

McKneff wrote: »

Where does this 9% NI come from, I thought it was 12%

the self employed pay £2.70 per week (NI class 2) and 9% over 7755 (class 4)

cobbychops

nomunnofun, thank you for your response.

I choose to work for one consultant As a medico-legal secretary undertaking private practice, I had the option of working for many consultants (as many of my NHS colleagues who also undertake private medico-legal work do), and that was my plan - a secretarial service. However, the work load for the one consultant alone means that I do not have the capacity in the week to work for more than one at present- this is also the same for some of my colleagues. Therefore my secretarial service is dedicated to one (at present).

Medico-legal secretaries like myself are paid per report/per clinic letter, not per hour. We do not work set hours/days. I set my own workload and choose what I do or do not undertake.

Before embarking upon this new post, I took the liberty of contacting HMRC to ascertain what would be required of me, and explained the set up and what I would be paid for and what I would be invoicing for and how my work would be undertaken. It was HMRC who advised me that I would need to register and complete a self assessment for tax purposes.

Likewise, when I was taken on by Dict8, a transcription company for medical secretaries, we were responsible for our own tax and national insurance contributions and all secretaries are employed on a self employed basis. We would invoice Dict8 for the work we undertook each month - this varied dependent upon how much work we managed to get through. This is the same for my current medico-legal employment.

With regards to the stationery (you were quite right to correct my spelling) - the consultant chooses to reimburse me for those consumable items (paper and envelopes - as they are ordered with his own logo printed upon them), although equally both I and he are happy for me to add a percentage to my monthly invoice to cover this.

Your comments are very interesting though, as it's something I hadn't really considered before.

Perhaps it may be worth going down the road of changing status to being employed by the consultant - although I am not sure how that would work as the volume of work varies and I am paid per report etc, which again varies due to his own timetable. Definitely food for thought, and thanks to everyone for their input, for which I am very grateful.