Help with tax/NI when both employed & self employed

beammeup101

Hi,

Does anyone have any useful links / tips for recording self employed income to HMRC, and paying income tax and NI? Its for my husband who is employed on a PAYE basis (& class 1 NI) but also wants to start private tutoring. I need an idiots guide on which expenses we can offset against the tax and how, and a template to record this on.

I know he needs to pay 20% income tax as has already used up his personal allowance in his PAYE job, but confused on how to offset expenses and pay NI.

Any ideas gratefully received

brendon

HMRC will send you a self assessment which you fill out after each financial year. Everything is in their format, you just have to fill in the boxes.

You are billed for NI semi-annually, unless you set-up a monthly direct debit with them.

You can claim for any expenses which are needed to run your business. You can't claim for personal use, or for capital items like machinery. There are more detailed information on this webpage: http://www.hmrc.gov.uk/incometax/relief-self-emp.htm

For record keeping, you simply need two piles of invoices -- one for sales (you create) and one for expenses (you've been given). If you have lots, it's best to record them in a spreadsheet.

beammeup101

Is NI based on earnings not profit? Found this and wondering if it applied (though his NI paid through his employed job is not small).

hmrc.gov.uk/forms/cf10.pdf

Presumably he can claim personal liability insurance against the tax? As he may tutor in the tutees homes.

chrisbur

beammeup101 wrote: »

Is NI based on earnings not profit? Found this and wondering if it applied (though his NI paid through his employed job is not small).

hmrc.gov.uk/forms/cf10.pdf

Presumably he can claim personal liability insurance against the tax? As he may tutor in the tutees homes.

NI as an employee is based on earnings and as self employed based on profit. Each is looked at separately so if self employed earnings are low enough to get a Small Earnings Exception then you can get one whatever your employed earnings are.

brendon

You have to pay NI at a flat rate of £2.70 per week (Class 2) unless you earn less than £5,725 and apply for exception. Then it's 9% between £7,755 and £41,450 and 2% on profit over that (Class 4). NI for regular (PAYE) employment will be taken separately (Class 1). The general rule of thumb is to put away 30% of your profit to cover Income Tax and National Insurance.