Been self employed for 10 months. How to pay tax?

JoeyJoe

I work in a serviced office. Equipment provided. I walk to work.

Arleen

JoeyJoe wrote: »

I work in a serviced office. Equipment provided. I walk to work.

Which is what points more and more towards the fact that you were an employee. So as booksurr said before, start rehearsing how exactly did you qualify as self-employed in those circumstances.

JoeyJoe

Thanks.

I'm not sure I do now! I didn't know you had to qualify. Ive always thought the difference was who deals with the tax.

What happens now? Who would be to blame for it? What's likely to happen?

Thanks for your help.

Joe

Arleen

Talk to your boss and figure it out with him.
It's virtually guaranteed that HRMC will ask about it, as any switch between employee<->contractor raises eyebrows. And the reason is simple - contracting is substantially cheaper as far as taxes and NI contributions go, so many people tried to "hide" employees as contractors in order to save money. And that just doesn't sit well with HMRC.

JoeyJoe

Well we didn't have a choice at the time. They wouldn't have hired anyone and I'd probably still be looking for a job!

I'll guess I'll have to cross the bridge when it comes to it.

Arleen

I would advise against that approach. I've made quite a few boo-boos with taxes since coming to the UK, and the key to resolving them was always the fact that I nipped it in the bud, rather than waiting for them to find out and chase me up. Mistakes happen, especially when you sincerely didn't know better, and no one should be punished for it. But when you decide to just sit on this info, well, that is a different story.

JoeyJoe

I'm not sitting on any info. You said in the previous reply that they will notice and ask questions. Before coming to this forum I didn't think anything was wrong with the way we were doing things. I'm not sure what I would say to them anyway to be honest. I just want to pay what I owe and move on.

Pennywise

JoeyJoe wrote: »

I'm not sitting on any info. You said in the previous reply that they will notice and ask questions. Before coming to this forum I didn't think anything was wrong with the way we were doing things. I'm not sure what I would say to them anyway to be honest. I just want to pay what I owe and move on.

Which is what you can do. There's a bit of scaremongering going on here from other posters. Just declare your s/e income and you're good, even better if you don't claim any expenses. Let your "employer" face the music on the unlikely event that HMRC investigate. Chances are that you'll submit your tax return, pay the tax and hear nothing again from HMRC about it!

booksurr

Pennywise wrote: »

There's a bit of scaremongering going on here from other posters.

now that we know the OP will not be claiming any expenses then yes i agree the implications for OP of declaring self employment are zero

however i think it is reasonable to have raised the question of the status since his future relationship with his now employer may (note use of word may) be strained if HMRC question & inspect the employer for false self employment and the employer is penalised

however, as we know HMRC are over stretched and won't inspect unless there is good money to be made. Op will pay all the tax he is liable for so as you say the justification for HMRC investigating in that case is relatively low other than to enforce rules rather than make lots of money from penalties imposed on the employer.

TheCyclingProgrammer

Pennywise and booksurr are both right. Generally false employment scenarios are not your problem but also as booksurr says your employment status could have an impact on any expenses you've incurred (because the rules for employee expenses and business expenses are not the same).

If as you say you're not offsetting any costs against your income then simply register for self assessment by October and get it filed by next January.

By default HMRC will probably expect payments on account for this tax year but if you're now on PAYE you can reduce these to zero.