PAYE + Self Assessment question

slhqoue

Hi all,

I am new to this so please forgive any ignorance in my questions. I am full-time employed and pay tax, student loan repayments and pension payments all through PAYE, receiving a monthly payslip.

I am undertaking some freelance work that will pay me a few thousand pounds. I realise I need to register as self-employed and fill in this amount online at HMRC, with the deadline for this tax year (last tax year?) being January. I have a few questions:

1. The freelance payment will be made in three payments. At what stage do I need to fill these in online?

2. As the freelance payment is above my basic salary, I assume I will have to pay quite a lot of tax and national insurance on this payment. Is there a way of reducing the amount of tax I need to pay by claiming legitimate business expenses? For example, I do need a new laptop. Could I claim the cost of this against the freelance payment?

Any advice appreciated.

purdyoaten

slhqoue wrote: »

Hi all,

I am new to this so please forgive any ignorance in my questions. I am full-time employed and pay tax, student loan repayments and pension payments all through PAYE, receiving a monthly payslip.

I am undertaking some freelance work that will pay me a few thousand pounds. I realise I need to register as self-employed and fill in this amount online at HMRC, with the deadline for this tax year (last tax year?) being January. I have a few questions:

1. The freelance payment will be made in three payments. At what stage do I need to fill these in online?

2. As the freelance payment is above my basic salary, I assume I will have to pay quite a lot of tax and national insurance on this payment. Is there a way of reducing the amount of tax I need to pay by claiming legitimate business expenses? For example, I do need a new laptop. Could I claim the cost of this against the freelance payment?

Any advice appreciated.

You say that you are 'undertaking ' this work which tends to suggest that it is about to commence. If so, it has commenced in 2014/15 tax year, the income and expenditure requiring to be declared on that year's return - deadline 31st January 2016.

On the laptap:

https://forums.moneysavingexpert.com/discussion/4944398

slhqoue

Many thanks for your reply. Yes you are correct about the tax year, so it appears that I have quite some time before I have to declare this income.

I read the link. Does this mean the expense of a laptop will be deducted from the total income and will be tax free?

For example:

If I get paid £4000 for the work and the new laptop costs me £1250, I will only pay tax on £2750?

purdyoaten

slhqoue wrote: »

Many thanks for your reply. Yes you are correct about the tax year, so it appears that I have quite some time before I have to declare this income.

I read the link. Does this mean the expense of a laptop will be deducted from the total income and will be tax free?

For example:

If I get paid £4000 for the work and the new laptop costs me £1250, I will only pay tax on £2750?

That would be correct. Remember to deduct the private use element (can you justify 100% business use i.e. the computer is to be solely used for this business?). Your self-employed entries should be extremely simple - Turnover, expenses, net profit - three figures only to be entered.

slhqoue

Can I ask what is a legitimate figure to enter as a private use element? I know this is in some ways a silly question, but I obviously want the private use percentage to be as little as possible on the form!!

Could you suggest any other legitimate freelance expenses I could claim against the turnover income of writing and editing manuscripts?

Prothet_of_Doom

purdyoaten wrote: »

That would be correct. Remember to deduct the private use element (can you justify 100% business use i.e. the computer is to be solely used for this business?). Your self-employed entries should be extremely simple - Turnover, expenses, net profit - three figures only to be entered.

Allowable expences, would include 45p a mile using your own car for business use, paper, printer, a proportion of telephone line rental, part of monthly mobile bill, working lunches with clients, work wear, Safety specs, PPE. Need I go on ?

Prothet_of_Doom

slhqoue wrote: »

Can I ask what is a legitimate figure to enter as a private use element? I know this is in some ways a silly question, but I obviously want the private use percentage to be as little as possible on the form!!

Could you suggest any other legitimate freelance expenses I could claim against the turnover income of writing and editing manuscripts?

Your percentage, could be the amount of time doing personal stuff, or the storage of personal stuff, or the amount of personal downloading data levels. Or you could just put 0% like "everyone" else. :rotfl:

slhqoue

Yes I was wondering whether a lot of people put 0%. I suppose the thing is that when filling in self assessment for a relatively small amount of extra income, the chances of a tax inspector actually checking these figures is miniscule, right?

Delphina

It is not just tax inspectors who open enquiries now. There are lower level staff looking into tax returns with potential tax losses smaller than the usual targets, too.

Re how much tax to pay:

At least it is going to be whatever you self-employment profit taxed at your highest rate of tax you have already paid at work. SOMETIMES, it is worth checking the tax rate bands first before earning extra! I blame the govt! LOL

slhqoue

Is there an 'additional income calculator' out there, similar to the popular 'take home pay' one? I tried looking but didn't find anything.