self employed plasterer advice on tax needed

danny2010

im a plasterer and have been for years but i worked for a company for 5 years so never had to worry about dong my own taxes. for the last month ive been advertising and getting enough work for myself but i have been getting paid in cash so far and i dont know what to do about paying tax. if someone decides to pay me by bacs or by cheque will i get in trouble becasue im not vat registered and havent told the government what im doing? or shall i just keep doing what im doing until someone contacts me? i havent got a clue on what to do so any advice will be great. thanks

booksurr

HMRC hates the construction industry for exactly the reason you demonstrate: people get paid cash in hand and fail to declare it.

Therefore you must register now as self employed because if HMRC catches up with you later and you haven't they will throw the book at you.

On the assumption that you personally do the plastering work, ie you do not employ anyone else to do it for you and/or you do not have a "helper" who you pay to work with you, then you are classed as a "sole trader" and registering for self employment is very easy, follow this 3 page guide: https://www.gov.uk/working-for-yourself/overview

you can ignore VAT unless your self employed income is more than £81,000 - which I somehow doubt is the case!

PS you can be both employed and self employed at the same time so if you continue as an employee of the company you worked for you can at the same time also have your own self employed income. It just means you have to include both sets of income on your tax return.

If you are organised with your paperwork there is no reason why you can't do your tax returns yourself as they should be pretty simple, if in doubt however may be worth getting an accountant for the first year. In your case we would charge around £400, others may be less or more expensive!

googler

Income tax and VAT are two separate things.

Do NOT register for VAT unless you expect to be turning over more than that £81,000 mentioned above.

Are you still working for the company you mentioned, or have you left them?

If you're still working for them as well as picking up self-employed work, you need to complete two sections of a tax return, one for each type of employment. If only self-employed, just one. As you get paid for each job, you should probably set aside 20% of what you get paid to cover against future tax demands.

When did you leave employment, if you have done so? Depending on this, you may need to find out how much tax you've paid already in the current tax year, to take into account in combination with your self-employed earnings.

danny2010

i do have a helper but hes just a friend who helps me on his days off for £50. i didnt register as self employed at first because i wanted to see how i get on but i havent had a day off for the past 3 weeks so im confident i can carry on.

danny2010

i left my old job at the beginning of july and earned 1600 a month after tax

googler wrote: »

Income tax and VAT are two separate things.

Do NOT register for VAT unless you expect to be turning over more than that £81,000 mentioned above.

Are you still working for the company you mentioned, or have you left them?

If you're still working for them as well as picking up self-employed work, you need to complete two sections of a tax return, one for each type of employment. If only self-employed, just one. As you get paid for each job, you should probably set aside 20% of what you get paid to cover against future tax demands.

When did you leave employment, if you have done so? Depending on this, you may need to find out how much tax you've paid already in the current tax year, to take into account in combination with your self-employed earnings.

booksurr

danny2010 wrote: »

i do have a helper but hes just a friend who helps me on his days off for £50. i didnt register as self employed at first because i wanted to see how i get on but i havent had a day off for the past 3 weeks so im confident i can carry on.

in that case you need to get this sorted asap...

either you have an employee and should be deducting tax from what you pay him, plus paying employer NI, under a real time information system reporting to HMRC. https://www.gov.uk/basic-paye-tools
You have until April 2016 to get that right or face penalties http://www.rossmartin.co.uk/penalties-a-compliance/penalties-appeals/1246-tax-penalties-rti

or you class him as a sub contractor in which case you must operate the construction industry scheme https://www.gov.uk/topic/business-tax/construction-industry-scheme

given the mistakes you are making you need to get professional advice....

xylophone

Find an accountant to set you on the right path? Have you thought about pension provision?

https://www.unbiased.co.uk/

HappyMJ

Or you could do what many in the construction industry do and just ignore the HMRC...but I wouldn't recommend ignoring them completely. A few jobs on the side for cash well lots of people do that but all (in reality most) of your trade income must be declared. You've got expenses you can use to reduce your profit and reduce the tax payable.

It's actually worth your while registering as a sole trader and paying some self employed national insurance contributions. You wouldn't to get to 67 years of age and find you've got all these missing years where you never paid in. If you don't pay in you won't get a full pension and self employed NI contributions are cheap...so well worth paying them.

katanaman

I'd recommend you get in touch with a local accountant. Most small accountancy firms will give you an hour of advice for free, and they deal with sole traders all of the time. By the sounds of it you probably don't keep a very good record of the work you do (I wasn't good at that either) so I would ask an accountant about doing your book keeping too, at least to work out how much you have to pay. A good accountant will pay for themselves in the amount they save you in tax, plus it's a good feeling knowing someone who is qualified is on your side.

Regarding your 'helper'. Easiest thing is to get him to register self-employed, and you take a share of each job, though your accountant will tell you this.