sole trader taxes? Whole of profits taxed or just beyond the 10k?

Midnight_Tboy

Hi all.

I just want to check something. Not sure if this is the right section but it seemed the most relevant section I could find on here.

So I work full time, on tax code 1000L.

My partner hasn't worked for a few yrs, looking after the kids.

She is now considering going self employed rather than regular part time employment.

She will not be vat registered

I understand that she also gets her own tax code of 1000l, but I'm wondering that is used with regards to the profits when self employed, as a sole trader?

IE...assuming she has no expenses, or marginal after hired accountant and so on....but makes, say £9900 turnover, then the full 9900 is treat as profit I believe.....as a result, other than her having to pay her Class 2 and a portion of Class 4 NI contributions....would that then result in no tax owed?

And likewise of course, larger amounts, such as say 20k, would get 10k taxed, plus around 12k or so in Class 4 contributions owed?

Or am I wrong, and every bit of profit as a sole trader is taxed?

jd87

Assuming she has no other income then yes it is as you say.

Midnight_Tboy

that's great - thanks for confirming.

As for other income - well at the moment, we have around 4k in Child Tax Credits, and a tiny amount of WTC coming in......though I believe that is in joint names, to our joint account. I think Child Benefit is under her name technically, but paid to our joint account.

Whilst the Child Benefit will remain, I believe the CTC drops dramatically (41p for every extra £1 earned which sucks big time...so effectively after the first year that will likely be at 0)

We'll be opening a seperate account for her self employed venture to keep things as straight forward as possible.

Midnight_Tboy

Yes I believe it was something like that....however as my salary is over 20k, it has already started reducing...so I assume that every single £1 my partner earns in her sole trader venture from the very start will reduce that child tax credit.....would be much better if she also has to earn at least 16k before her extra counts towards it, but I don't think thats the case