Self Assesment Questions

scaredofdebt

Hi,

I work full time so am on PAYE but I also do some freelance work - I am looking at doing my tax return online presumably I choose the "self-employed or a sole trader" option when registering?

Also, what NI contributions should I be paying? My second income is modest, around £4k last year (it will be much lower this year), do I pay a percentage as I do for my PAYE income or do I pay a flat amount, in which case what?

Thanks for any advice.

TheCyclingProgrammer

If you're working as both employed and self-employed then you need to fill out a sheet for both. You'll need your P60 (and P11D if you have one) to fill out your employer sheet and your business income and expenses to fill out your self employed sheet.

NineDeuce

Its 20% of your profits. I would recommend saving 25% of your SE profits as you go on. That will cover it and you will probably have some left over at the end.

This is assuming that in total you dont hit £40k earnings in total combined with your salary.

TheCyclingProgrammer

NineDeuce wrote: »

This is assuming that in total you dont hit £40k earnings in total combined with your salary.

You can earn up to £45k before you start paying higher rate tax.

OP - if your earnings are only £4k (or lower) you won't have any NI to pay. Class 2 NIC is paid at the rate of £2.85 a week if you earn above the small profits threshold which is £6025.

scaredofdebt

Thanks guys.

Total income for last year will be under £45k so that's a relief!

I am going to put away money in future, didn't expect last year to be as good as it was but when you add it all up it's quite surprising.

NineDeuce

TheCyclingProgrammer wrote: »

You can earn up to £45k before you start paying higher rate tax.

OP - if your earnings are only £4k (or lower) you won't have any NI to pay. Class 2 NIC is paid at the rate of £2.85 a week if you earn above the small profits threshold which is £6025.

Ok, thanks for the correction. The Class 2 NIC always comes up as voluntary. Does opting out of this affect the state pension? I pay NI on my regular salary and will pay NI 4 if I ever go about 45k...

TheCyclingProgrammer

NineDeuce wrote: »

Ok, thanks for the correction. The Class 2 NIC always comes up as voluntary. Does opting out of this affect the state pension? I pay NI on my regular salary and will pay NI 4 if I ever go about 45k...

If you've paid enough NI in your main job to get a qualifying year there is no need to pay voluntary class 2 NIC.

00ec25

NineDeuce wrote: »

Ok, thanks for the correction. The Class 2 NIC always comes up as voluntary. Does opting out of this affect the state pension? I pay NI on my regular salary and will pay NI 4 if I ever go about 45k...

if your employee pay is more than £113 (the lower earnings limit or LEL) if paid weekly, or 489.66 if paid monthly, then your employee NI is already giving you full benefits such as pension etc. Therefore it is pointless to voluntarily pay class 2 ("self employed") NI on top of that as it gives you nothing more.

the reason class 2 is sometimes labelled voluntary is because if your own only source of income is self employment, but you do not earn enough from that self employment to have to pay class 2, you can voluntarily pay class 2 to give you some basic state entitlements such as the state pension credit

class 4 is not a voluntary tax, either your self employed profits are above the threshold (8,164) and you must pay it, or they are not and you do not pay it. You would pay class 4 @ 9% on profits between £8,164 and 45,000 and then @ 2% on everything in excess of 45k

[Deleted User]

00ec25 wrote: »

if the NI that is deducted from your employee pay is more than £113 (the lower earnings limit or LEL) if paid weekly, or 489.66 if paid monthly, then your employee NI is already giving you full benefits such as pension etc. Therefore it is pointless to voluntarily pay class 2 ("self employed") NI on top of that as it gives you nothing more.

the reason class 2 is sometimes labelled voluntary is because if your own only source of income is self employment, but you do not earn enough from that self employment to have to pay class 2, you can voluntarily pay class 2 to give you some basic state entitlements such as the state pension credit

class 4 is not a voluntary tax, either your self employed profits are above the threshold (8,164) and you must pay it, or they are not and you do not pay it. You would pay class 4 @ 9% on profits between £8,164 and 45,000 and then @ 2% on everything in excess of 45k

I would be fairly certain that you meant earnings above £113 and not NIC deducted above £113

00ec25

[Deleted User] wrote:

I would be fairly certain that you meant earnings above £113 and not NIC deducted above £113

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