Tax, benefits and finance

Forest657

Hi all

I have been reading these forums for a long time but figured now was the right time to post.

To supplement my income I am looking at private tutoring. In my main job I am on the lowest tax code and pay tax through PAYE

What I am finding very confusing is:

What percentage of income from tutoring can I expect to lose through tax/NI?

What happens with tax credits and housing benefit. We only get a small amount but couldn't live without it, I want to be able to get more income, not less because they take away more than I can earn.

Many Thanks

oldboy64

Forest657 wrote: »

Hi all

I have been reading these forums for a long time but figured now was the right time to post.

To supplement my income I am looking at private tutoring. In my main job I am on the lowest tax code and pay tax through PAYE

What I am finding very confusing is:

What percentage of income from tutoring can I expect to lose through tax/NI?

What happens with tax credits and housing benefit. We only get a small amount but couldn't live without it, I want to be able to get more income, not less because they take away more than I can earn.

Many Thanks

If you receive more income your benefit entitlement will go down!

Forest657

oldboy64 wrote: »

If you receive more income your benefit entitlement will go down!

Yes but what % does it go down?

For instance, if I have £50 a week housing benefit and earn £30.

Would housing benefit go down by £30? or less than £30? Or would they take all housing benefit away?

pmlindyloo

The first thing you need to do is register as self employed (google to see how)

The second thing you need to do is employ a good accountant. For a couple of hundred pounds a year he/she will guide you through what accounts you need to complete, what deductions you can claim (stationary, photocopying/travelling expenses etc etc) and complete your tax from for you. The fee is also tax deductible.

As regards both tax credits and housing benefit, as you have not started your self employment yet and have no previous year's account to give your profit then you will need to give them an estimate of the year's income. That is why it is vital that you speak to an accountant so they can advise you on your potential profit.

Have you got some pupils lined up and do you know what you are going to charge? (the accountant will need to know this)

Of course you may lose some benefits but you will be earning more income and this should compensate for the loss.

A link about HB

http://www.enfield.gov.uk/info/69/housing-benefit-new_claim/155/housing_and_council_tax_benefits_for_self-employed_people

Forest657

Thanks for that.

I don't actually have anyone lined up, I am starting from scratch (fed up working for others).

In my head, I am even thinking of registering a company and go down the route of starting a consultation and school support company, focusing on the early years. I do have some contacts that can get me into schools. My issue is, I find tax and finance bewildering and every time I get excited I start to look into it, get confused and give up.
I want to get myself out of debt and earning enough to support my family.

princessdon

Forest657 wrote: »

Thanks for that.

I don't actually have anyone lined up, I am starting from scratch (fed up working for others).

In my head, I am even thinking of registering a company and go down the route of starting a consultation and school support company, focusing on the early years. I do have some contacts that can get me into schools. My issue is, I find tax and finance bewildering and every time I get excited I start to look into it, get confused and give up.
I want to get myself out of debt and earning enough to support my family.

Regarding your consultancy work in early years, funding has dramatically reduced and we are now encouraged to train staff. So whereas 2 years ago we had a lot of outside bought in, it's far less now and will get worse.

Parents will still pay and if you give a taster free to the school it will drum up interest, but I wanted to let you know that funding is smaller and smaller.

No one can give you a 100% reply as it depends on earnings but a general HB guide is you lose 41p per £1.00 of income.

Forest657

princessdon wrote: »

No one can give you a 100% reply as it depends on earnings but a general HB guide is you lose 41p per £1.00 of income.

Thank you

That is exactly the sort of figure I am after.

So I lose that for HB, and then I would assume there is a reduction in tax credits too.

No wonder people don't want to go out to work

Pride makes me work, but I can see how people get caught in the benefits trap

somethingcorporate

Forest657 wrote: »

Thank you

That is exactly the sort of figure I am after.

So I lose that for HB, and then I would assume there is a reduction in tax credits too.

No wonder people don't want to go out to work

Pride makes me work, but I can see how people get caught in the benefits trap

Add on tax and you're looking at quite a big reduction!

Forest657

Exactly. That means I can't afford to take a new/second job and leaves me stuck claiming benefits

marliepanda

Surely if you can start earning enough to compensate for the 'loss' of the benefits, even taking a small loss at first, then hopefully your business/pride/confidence will grow and you will end up working more, earning more, out of debt and supporting your family.

I don't understand the 'working for nothing' idea people get stuck on.

Forest657

Because with removal of benefits + the extra tax, it would be working for less and I cant afford to take a drop in any money (I am in quite serious debt and every single penny gets spent).

I would most certainly work all the hours under the sun for the same money we get now