Self Employment madness!!

BenBen_2

Hi all,
I have a couple of questions re. registering for self employment...

For some time now I've been working for various different companies. Most pay me by PAYE and take tax accordingly.

However, I also do a bit of work for a company which I invoice for. Until recently, I have never made more than £1,200 in a year from them, so was told by someone that it would be below minimum amount I need to pay tax on. I am beginning to think that may be incorrect.

I am now making more money from them, and so I think I should register as self employed.

I heard an ad on the radio that said if I leave it too long, I could be fined.

I phoned up the new start people and the first question they asked was how long ago I started working self employed.

I'm beginning to think I may have done something cheeky

When should I tell them I started invoicing? Is invoicing the same as being self employed?



Thanks peoples!

daffynspacegirl

Try looking on this website http://www.startups.co.uk/ A lot of info on there, may help in some way.

Debt_Free_Chick

BenBen wrote: »

When should I tell them I started invoicing? Is invoicing the same as being self employed?

It's actually the day you starting doing the work - and that could have been months before you issued the first invoice.

The advice you had about the "minimum for tax" is wrong - any minimum for tax covers ALL your income, including that from jobs where you pay PAYE tax.

How long ago did you start?

harryhound

Hi Ben Ben,

Have you been a bit too honest ?

I think it works like this:

You are legally required to report your worldwide income to Her Majesty's Revenue & Customs (assuming your permanent home is in UK and you live here). Tax is payable for most people on every pound of income over your personal allowance.

National Insurance is an additional TAX that works on slightly different rules from Income tax. If you are employed (PAYE etc.) your employer collects your NI and tax on behalf of HMR&C. If you have some odd ball income, such as the work youu invoice to your customer, these casual "one off" payments can be reported in any other income on the tax return or perhaps simply be reported by letter to your PAYE tax office.

However if it looks like you are going to make over 4465 GBP a year, you should register as self employed and start paying 2.10 GBP per week Class 2 National Insurance. You can find yourself employed and self employed at the same time. Obviously as soon as you have registered the system will start sending you forms to fill in and you will look forward to spending perhaps a day of your life each year doing your accounts and tax return (It is not all bad news, you can claim for stuff that would not count for your PAYE jobs.)

Assuming you have dropped yourself into the self employed camp, may be thought to have failed to report your status promptly and you are NOT going to reach the 4465 GBP level by the end of the tax year (05apr08) I would 'phone them back and say you want to complete a small earnings exemption (from NI payments not tax !)

Harry

PS having a mixture of employment and self employment can mean paying less to the government than being 100 percent one or the other.

If you search the tax part of this forum you will find several people who have asked similar questions to yours.

Bean_Counter

You should have registered with HMRC as self-employed within three months of starting, regardless of the amount earned. You can claim exemption from class 2 if below the £4,465 that Harry mentioned above.

Try the HMRC getting started section:

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

harryhound

For the 07/08 tax year, the NI exemption for Class 2 has gone up to 4635 GBP per year.
That is "earnings" ie the profit you have made after deducting your costs of doing business.

I'm not clear as to what business you are doing as a self employed person BUT presumably you are going to claim to be doing it from your home ?

Your place of business comes in useful when claiming expenses for going to see your customer(s). The mileage allowance for using your own car, is particularly useful, especially if you have a thrifty car.

If you have got the time and inclination, have a good sniff round in the tax threads on here to find the legitimate ways of minimising your tax and minimising the unpaid burden of keeping an account & calculating your tax liability.

For little fish like you and me, I would recommend using HMC&E's on-line tax return system and keeping everything on a "cash" basis. The tax man would probably like to see you putting anything to do with your "business" through a bank account reserved for your business only (Best not to explain to your bank/building society or they might get excited about selling you a "business" account).

Who knows, in a few years time you might be worrying about registering for VAT !

Good luck,

Harry.