Tax and NI when setting up a part time business

JasonHand

Good Morning

I hope I'm posting this in the correct place and I'm sure this has been asked many times so many apologies

Basically my Wife is considering setting up a part time business to run from our home. But she is going to run the business whilst in full time employment.

Now I've just been looking at how things work when it comes to paying income tax. She is on PAYE on her current role. My understanding is any profit she makes on the part time business is added onto her income from her current job. But how does she go about declaring the profits from her part time business? Does she simply declare it on the form we all get at the end of the financial year which shows what tax we have paid / owe? I've never really taken any notice of this particular form because I'm PAYE so its never been of any concern.

Am I also right in thinking she wouldn't need to pay NI until her profits exceeded a certain amount.

As for expenses would she be able to use things like her mobile phone contract charges and even things like utilities?

I do hope I've posted this in the right place.

Dazed_and_confused

She needs to register for Self Assessment and will have to file a return each year.

Tax due on any profits can be a mix of nothing, 19%, 20%, 21%, 40%, 41%, 45% or 46% depending on her PAYE income and where she is resident for tax purposes.

Class 2 National Insurance is usually due on profits above about £6k and Class 4 National Insurance when profits get to £8-9k I think this year.

If you look at the self employment page of the 2018:19 tax return and accompanying help sheet on gov.uk it will give you some idea about expenses.

You should also read up on the "Trading Allowance" as this might be relevant depending on the level of expenses incurred. Trading Allowance doesn't apply if her business is associated with her PAYE job.

JasonHand

Dazed_and_confused wrote: »

She needs to register for Self Assessment and will have to file a return each year.

Tax due on any profits can be a mix of nothing, 19%, 20%, 21%, 40%, 41%, 45% or 46% depending on her PAYE income and where she is resident for tax purposes.

Class 2 National Insurance is usually due on profits above about £6k and Class 4 National Insurance when profits get to £8-9k I think this year.

If you look at the self employment page of the 2018:19 tax return and accompanying help sheet on gov.uk it will give you some idea about expenses.

You should also read up on the "Trading Allowance" as this might be relevant depending on the level of expenses incurred. Trading Allowance doesn't apply if her business is associated with her PAYE job.

Thank you very much. The Trading Allowance thing you've mentioned will def be worth a look. Her business won't be associated with her PAYE job.

Thanks again for taking the time to reply. Its much appreciated

Dazed_and_confused

Scottish resident = 0, 19, 20, 21 or 46%

Everywhere else in UK = 0, 20, 40 or 45%