tax / ni questions for small ish ebay seller account

edited 30 November -1 at 1:00AM in Cutting Tax
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19lottie8219lottie82 Forumite
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edited 30 November -1 at 1:00AM in Cutting Tax
hello, im very new to this so please be gentle;)

i have set up an ebay business where i am selling products that i purchase from china.

i expect my takings to be about 9k a year and my "profit" (before tax) to be about 2.5 - 3.5 k a year.

i know that this is below the 5.4k ish cut off for paying class 2 NI contributions

I have a FT (PAYE) job where I earn 24k a year and pay tax / NI. Does this in anyway affect my NI liability in my self employment?

Also, I use my home broadband connection and my mobile phone (data and emails when I am out and about) for my business. However obviously I use them for personal use also.

My BB is £20 a month, and my mobile phone bill is £22 a month.

Can I claim back some or all of these costs when I file my self assessment tax return in April?


Thanks!

Charlotte

Replies

  • Hello!

    You pay class 1 NI on your employment, and class 2 and 4 NI on your self employment. Class 2 is a flat rate of £2.70 per week, but you can apply for a small earnings exception if your profit is going to be below aprox 7k, which yours is. Class 4 kicks is charged at 9 percent of your profits over the threshold, again about 7k ish. So you will probably not be paying NI, but you will still need to register, and then apply for a small earnings exception from class 2.

    You can claim for the business proportion of your home broadband and mobile. So say, on average, you spend two hours a day e-baying for your business, and two hours doing personal stuff, you would claim fifty percent of the cost. It can be quite difficult to actually quantify, but I wouldn't panic too much unless the amounts are large - the actual tax saving is likely to be negligibe if you are a basic rate tax payer.
  • 19lottie8219lottie82 Forumite
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    Hi Laura - Thanks a lot for your reply :T

    OK, so my main job has nothing to with my NI contributions here..... as long as I earn under the Class 2 threshold, I don't have to pay? I have an application of exemption of liability form completed, should I send that in now, or when I complete my self assessment in April?

    So if I claim 50% of my BB and mobile phone cost, totalling £21 a month, this should be OK?

    And one last question...... at the initial stage of my self assessment do I just provide the HMRC with my figures, and no paperwork? Will they actually ask to see any documents if they don't have any concerns? Jus to point out, I'm not planning on diddling them, I'm just curious!

    Thanks again!
  • 19lottie82 wrote: »
    Hi Laura - Thanks a lot for your reply :T

    OK, so my main job has nothing to with my NI contributions here..... as long as I earn under the Class 2 threshold, I don't have to pay? I have an application of exemption of liability form completed, should I send that in now, or when I complete my self assessment in April?

    Now

    So if I claim 50% of my BB and mobile phone cost, totalling £21 a month, this should be OK?

    If that is a reasonable estimate - Yes!

    And one last question...... at the initial stage of my self assessment do I just provide the HMRC with my figures, and no paperwork? Will they actually ask to see any documents if they don't have any concerns? Jus to point out, I'm not planning on diddling them, I'm just curious!

    Thanks again!

    No documents should ever be sent with a Self-assessment return but should be retained in case HMRC look into that return and ask for evidence to back the figures up. As you are employed also, remember to include your PAYE earnings.
  • 19lottie8219lottie82 Forumite
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    brilliant, thanks again guys :beer:
  • zygurat789zygurat789 Forumite
    4.3K Posts
    Part of the Furniture Combo Breaker
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    19lottie82 wrote: »
    Hi Laura - Thanks a lot for your reply :T

    OK, so my main job has nothing to with my NI contributions here..... as long as I earn under the Class 2 threshold, I don't have to pay? I have an application of exemption of liability form completed, should I send that in now, or when I complete my self assessment in April?

    So if I claim 50% of my BB and mobile phone cost, totalling £21 a month, this should be OK?

    And one last question...... at the initial stage of my self assessment do I just provide the HMRC with my figures, and no paperwork? Will they actually ask to see any documents if they don't have any concerns? Jus to point out, I'm not planning on diddling them, I'm just curious!

    Thanks again!

    It isn't a threshold, you may pay Class 2 NI if you have any self employed income and at £2.70 pw it is a cheap way of qualifying.
    You may claim exception if your self employed earnings are less than £5,725 in 2013/14.
    If you are going to claim, claum now. You may always pay later if you have to but getting the money back .............!
    The only thing that is constant is change.
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