Being Self employed AND employed at the same time

swanny65

lcheater wrote: »

Sorry, i read your post before you added all the other paragraphs! Thanks for your input, so if i register with the Inland Revenue as self employed, then set up a business account, that it really. I will be keeping a very detailed record of the business account activity and therefore when it comes to doing a tax returns i can assure my figures are accurate. One term you mentioned 'taxable profit' - I understand profit is obviously taxable, but how do you work out profit when everything is operating from one account? If i buy a car for £4000 and sell it for £5000 and i have £250 of expenses against that car, how do i prove i made a £750 profit? I maybe missing something here!?

I would keep two excel spreadsheets. 1 for income and 1 for expenses. Then, in your example, you will show £4000 purchase and £250 repairs etc in the expense account and £5000 in the income account.

Obviously how detailed you keep you expenses spreadsheet is your choice but in my experience the more detailed the better as if helps producing the end of year profit and loss account.

lcheater

swanny65 wrote: »

Your S/E earnings are added to your PAYE earnings and taxed at the appropriate rate. If the S/E earnings take you into the 40% tax bracket then your tax will be calculated accordingly. Your PAYE code will change if you decide to pay your S/E tax (owed from previous years) via your PAYE code (this is what i do). However you can only do this if your PAYE earnings are 80% or more of your total income, otherwise i believe you will have to pay on account.

S/E NI is paid by direct debit and is a few pounds a week. Check HMRC website. Class 4 NI is assessment with your income tax liability and paid as per para 2 above

Can i choose to keep the self employed tax seperate from the employed tax as 'lynnechapman' mentioned in the post above. I suppose 'lynnechapman' is refering to 'Cute 'n' Quirky's' comments 'Att the end of the year the employer sends me a P60 which lays down the amount paid to me and the amount of tax paid. This goes on my tax return and is calculated as 'tax paid'. The self-employed side then has that tax deducted from the taxable profit and I pay the difference.'

zfrl

lcheater wrote: »

but i am interested to know more about the VAT registration. As i said in my original post, about not having to register for VAT if you earn under £64000 pa, if i am turning over less than 64k i dont need to register?

Remember for VAT it is turnover not profit - you don't have to turnover many £5000 cars to hit the registration limit - call the VAT office who will give you more info.

lcheater wrote: »

If i ask a bank for a loan, cant they secure the loan against my PAYE income as a personal loan (or as a home owner i could secure it against my house couldnt I?)

As you will be self employed with no business assets I imagine a company would only give you a personal loan - which you could secure against your property if you had to.

swanny65

You are correct.

lcheater

This all sounds reasonably simple but i think i would feel happier letting an accountant do it, depending on their prices! Can anyone give any rough figures for sorting out a tax return at the end of the year?

I have heard that an initial consultation for when you first start up can be free of charge depending on the offers at the time and who you go to.

The other option i have is to put away a certain percentage of my profit so that when i submit my tax return i wont be caught short. What do people advise for this?

zfrl

Again this will depend whether you are VAT registered or not - it also depends how much work they have to do. If you keep good accurate records they only have to fill in the boxes. If you hand them a bag or receipts & invoices it will be a different matter.

How much to put by? Again if you are VAT registered as this 17.5% can quickly mount up!

lcheater

swanny65 wrote: »

Firstly check with the Local Authority that you are allowed to trade in this manner from home. Might be perfectly OK but neighbours are likely to complain if you are regularly selling vehicles at your home. Obviously people can run a business from home but no one wants a second hand car dealership nearby.

My drive is big enough to take around 8 cars but we only have 4 between us. Therefore one extra car which will just be sat there with no for sale marking etc on it is not going to bother anyone. The advertisments will be on the internet and local papers, I dont plan to turn my drive into a car sales forecourt so for neighbours, they wont be put out or see anything different from normal.

hopon

From a vat point of view you should have a read up on 2nd hand margin scheme

Basically it works as selling price £5000 purchase price £4000 = profit £1000 which is then split as £851 net & £149 vat due.

As for an accountants costs it does depend on the amount of transactions and how well you maintain the records. At a guess it would be in the £500 region.

mrsS_2

see an accountant!

Second hand car dealers have special rules for VAT- it is one of the few businesses where vat is paid directly on the margin, not on the cost and sale price of the car. It is fairly complicated and involves keeping detailed stock records.

This is not something you want to mess about with before you know what you are doing!

sorry to be blunt, but most people find normal vat rules fairly complicated, let alone special schemes.

On your self employed/employed point, there is no problem being both at the same time. However, you will need to fill in the self employment pages of the tax return and pay the extra tax in 2 instalments each year.

Depending on which year end you choose can delay the payment of the tax payable.

As a sole trader, companies house do not become involved at all. This is only if you are a limited company-again an accountant will be able to advise if this is the correct route.

lcheater

hopon wrote: »

From a vat point of view you should have a read up on 2nd hand margin scheme

Basically it works as selling price £5000 purchase price £4000 = profit £1000 which is then split as £851 net & £149 vat due.

As for an accountants costs it does depend on the amount of transactions and how well you maintain the records. At a guess it would be in the £500 region.

The 2nd Hand Margin Scheme seems very good. i will have a read through that link and see what i think. It doesnt seem too bad to be quite honest but i will study it to make sure i fully understand it. Thanks for everyone's advice, much appreciated so far!:T :beer: