Self Employed and Tax

tyroneshoelaces

I am relatively new to the world of being self-employed but I was wondering if someone could provide me with some simple info on the tax that I pay.

I am a freelance writer and I use an online platform to generate the majority of my work.

So, lets say for arguments sake that I charge a client £10 for a piece of work, the platform take £3 off me as their fee, which means I get paid £7. That £7 gets taxed and I get the remained. However, would I get taxed on the fee that I pay? The reason I ask is that the invoices that are generated do not show the fee that is deducted, only the full amount, which I am really worried will look to HMRC as though I am receiving the full £10.

Can anyone shed some light on this as I have been putting aside money for tax based on what I am actually receiving into my account ( in this case it is the £7 less tax)

I am having a huge panic over it but I don't see why I should have to pay tax on the fee that I am paying!

Thanks!

agrinnall

You're taxed on your profit from self employment. In your case I'd say that your receipts are for £10 with expenses of £3, so your taxable profit is £7. What you need is documentation from the online platform that they are taking the £3 each time.

Comms69

tyroneshoelaces wrote: »

I am relatively new to the world of being self-employed but I was wondering if someone could provide me with some simple info on the tax that I pay.

I am a freelance writer and I use an online platform to generate the majority of my work.

So, lets say for arguments sake that I charge a client £10 for a piece of work, the platform take £3 off me as their fee, which means I get paid £7. That £7 gets taxed - who taxes this £7? and I get the remained. However, would I get taxed on the fee that I pay? The reason I ask is that the invoices that are generated do not show the fee that is deducted, only the full amount, which I am really worried will look to HMRC as though I am receiving the full £10. - but you'll have copies of these payments I assume

Can anyone shed some light on this as I have been putting aside money for tax based on what I am actually receiving into my account ( in this case it is the £7 less tax)

I am having a huge panic over it but I don't see why I should have to pay tax on the fee that I am paying!

Thanks!

You don't pay tax on expenses. Which I think is how this is best worked out.


IE you declare the £10, but deduct £3 for the expenses.

tyroneshoelaces

Hi,

Thanks for the reply. I think you are right about the expenses.

In terms of the tax on the example of £7, that would be my tax and NI.

Comms69

tyroneshoelaces wrote: »

Hi,

Thanks for the reply. I think you are right about the expenses.

In terms of the tax on the example of £7, that would be my tax and NI.

So you have no other expenses? Such as a laptop?

tyroneshoelaces

yes I do have some other expenses such as a small amount of printer use, laptop use, electricity and that kind of thing.

I know I can claim for these things but I am not sure if it is worth it being as I am a one-man band? What do you think?

Comms69

tyroneshoelaces wrote: »

yes I do have some other expenses such as a small amount of printer use, laptop use, electricity and that kind of thing.

I know I can claim for these things but I am not sure if it is worth it being as I am a one-man band? What do you think?

It's literally free money youd be saving.

tyroneshoelaces

I thought I would revive this thread slightly as I am really confusing myself with the whole expenses thing and I actually think that I have thought about it so much that I have confused myself so I would really appreciate it if someone could shed some light on this!!

Ok, using the example I gave in the original post:

I charge £10 per job and the platform I use charges £3 for this, of which 20% is made up of VAT (I am not VAT registered)

So, on all invoices it clearly states that I have been paid £10 and this is what I will be taxed on so £10 - 20% basic rate and 9% NI, will leave me with £7.10. However, as I can claim back the fee less the 20% VAT would that means that in actual fact my earnings per job is £9.40 effectively?

Could anyone clear this up for me? I have emailed my accountant but not had a reply but I don't want them to charge me for such a simple query!

Thanks!

Me2you

Get an accountant. It’s a tax deduction and you will be working within the law and claiming the max amount.

tyroneshoelaces

yes, I do have an accountant but I thought I would ask on here as I literally do not have enough time in the week to arrange to see them as I am always working!

tyroneshoelaces

I am just worried that I have been working all my tax out wrong and putting the incorrect amount away each month.

For example, I have a job for one client which is work £360 and the fee for this is £32.40.

So, do I deduct the tax of the £360 and put that aside or do I put aside the tax - the amount I can claim back from the fee as an expense which would be £25.92 I believe.

I am just not sure which way around I should be working it out!