Etsy as a second job

claire8370

Hello everyone,

I have set up an Etsy shop which I run alongside my full time job. In the last two months I am chuffed to have made a profit of around £400, I want to save most of the money I make from here onwards towards a house deposit. I am opening a LISA, so I would want to make regular payments to that. Every so often I would like to use this money for a 'treat' too, say if I have a really good month.

I am registered with HMRC and have been bookkeeping. I wonder if anyone can provide any advice on how to go about making sure I leave enough in my account to cover my tax bill each year? Do I just deduct 20% from the profit on each item and ensure this stays in the account.

I earn £32,000 in my first job and anticipate around £6000 pa from my Etsy shop. Will I pay 20% tax or more?

Any advice would be greatly welcomed

00ec25

higher rate tax starts with a gross pre tax income of £45,000, obviously therefore you have 13k of profit before you reach that

however, your etsy business will be offically treated as self employment income so you will need to pay some national insurance on it if your annual profit is above the self employed thresholds of which there are 2:
profits above £6,025 = class 2 NI : £2.85 per week
profits above £8,164 = class 4 NI payable on top of the class 2 @ 9%

given your initial estimate of 6k profit (?) it would be wise to set aside at least £1,200 for income tax (20%) plus £149 for class 2 NI. once you go over the 8k threshold you will need to review your position.

https://www.gov.uk/self-employed-national-insurance-rates

bengalknights

Instead of 20% i would suggest 23% that way you have covered NI and tax