Self Employment Tax Advice

draddict

Hi all,

I was just wondering if anyone out there could offer me some tax guidance?

I've been self employed for a couple of years now as a graphic designer and I have been working from home, my registered place of business. Up until the new tax year this year, I didn't earn enough to pay any taxes on my self assesment and my income was apparently below the amount allowed before tax.

Now however, I am working on a long term project for a client as well as still doing other smaller jobs, all on the books as well, and it is clear that for the first time I will be paying tax next April.

My questions are these;

1. How much can I actually earn before having to pay tax? Is it still £8000 or similar?
2. When should I start taking tax out of the money earned on a weekly basis to pay my taxes and how much should I set aside each week?
3. A book keeper friend of mine has said that because my registered place of work is my home and because I travel 24 miles every day that I work for this long term client (he prefers me to work on site at his business), that I should be able to claim back tax for diesel (I'm told 45p per mile). I dont have reciepts for all of my diesel but I do have invoices for each week that I have been on his premesis he should be happy to provide written priof should I require it. My question is, does this sound correct? Its pretty much my only business expenditure, although I am planning on buying a new printer and PC soon.

Thanks in advance, let me know if you need any more info in order to offer the correct advice!:cool:

tiger_eyes

Let me start you off with the answer to 1. your personal tax allowance. For the current tax year it's £9440, so your first £9440 is tax-free.

draddict

Great, thank you. I'm about £1000 off of that at the moment so im hoping I can get advice on my other questions as easily.

Is that figure definitely for SE people? Is it different again for employed people?

Thanks again - I feel like such a flake for not knowing this stuff going into business, but its the first time I've needed the info!

John_Pierpoint

class 2 and class 4 national insurance ?

http://lmgtfy.com/?q=class+2+class+4+national+insurance+contributions

May 30, 2013 - You pay National Insurance if your profits are above £5,725 and you'll pay more when your profits rise above ... Annual profits, Class 2, Class 4 ...

Remember the duck test.

http://lmgtfy.com/?q=the+duck+test

chrismac1

Class 2 NI is the fixed stuff you'll be paying every quarter if you are registered for SA. £7,755 is the level of profits at which class 4 NI becomes payable at 9%. The after 9,440 20% tax kicks in so it is 29% in total.

The tax for 2013-14 will be due on 31 January 2015. If you get your return submitted in April or May you'll have plenty of time to budget for it.

You can claim the mileage. For each car you choose whether it is 45 pence, or the business mileage % of your motoring costs. In my view you need to be mindful of the "24 month" rule as suggested by your friend.

You'll have telephone costs, possibly insurance, at least £208 for "use of own home" and the costs of any spends between now and 5 April to deduct. So it could well be that no tax is due.

zygurat789

chrismac1 wrote: »

Class 2 NI is the fixed stuff you'll be paying every quarter if you are registered for SA. £7,755 is the level of profits at which class 4 NI becomes payable at 9%. The after 9,440 20% tax kicks in so it is 29% in total.

The tax for 2013-14 will be due on 31 January 2015. If you get your return submitted in April or May you'll have plenty of time to budget for it.

You can claim the mileage. For each car you choose whether it is 45 pence, or the business mileage % of your motoring costs. In my view you need to be mindful of the "24 month" rule as suggested by your friend.

You'll have telephone costs, possibly insurance, at least £208 for "use of own home" and the costs of any spends between now and 5 April to deduct. So it could well be that no tax is due.

Since the OP has not been earning enough to pay tax then there may have been an election not to to pay class 2 NI, if so, this needs to be reviewed.
The tax is on earnings over £9440 (for everyone), earnings are income (sales) less expenses ie car, ophone, use of home.
Your knowledge on the important business subjuect of tax is fairly slim, you should consider a long talk with your friend.

draddict

Thanks for your help, its cleared a fair few things up for me :j

cynicalgit_2

Talk to a good accountant not some bulls****er in a bar.
You can also offset any equipment associated with your self employment,such as computers and laptops.
You really need expert initial advice, a good accountant can save you more money than they cost.

draddict

Thanks again - my friend isn't a bull*****er in a bar though, she's a qualified bookkeeper lol!

zygurat789

draddict wrote: »

Thanks again - my friend isn't a bull*****er in a bar though, she's a qualified bookkeeper lol!

With the greatest respect there is a world of difference between a qualified bookkeeper and someone who knows how to use the tax system.
I'm sure your friend understands this and will direct you if she does not have the knowledge.