Brand new business - when do i file tax?!

Veganhealthiswealth

Started a new business in November 2021
Have been reading up on the tax returns (yes i know i'm a little delayed, please bear with me, running a second business AND working full time with kids is pretty hefty) and it says on the HMRC that i dont need to Register until 5 Oct in the business' second tax year - which would be Oct 2022 i guess??

Does this mean we dont have to submit anything this year?

Sandtree

Are you operating as a sole trader?

Assuming you are then yes, no later than Oct 2022 to register but there is no benefit in delaying. First return will be due by end Jan 2023 which will cover Nov21 to Apr22... you can submit any time before then (obv has to be after the year closes)

MalMonroe

Yes, that's how HMRC work, retrospectively. My daughter and I, both self employed, put money in savings accounts to cover our tax bills. Just in case. . . . 

Sandtree

Strongly advise to put the money away as you earn it... I've known too many people that dont, they start saving up from "jul 22" to pay the Jan 23 estimated bill and that works for each year whilst they have this secondary income stream but then you stop in April 30 because its got too much for you etc and you have to pay a bill in Jan 31 for a whole years earnings whilst not earning the extra money. Its caused some major stresses etc as some where not small bills.

Saria

I have a similar question.
I started doing freelance work from September after becoming unemployed in August. I've registered online as self-employed. Do I need to do anything then now, or do I do my self-assessment next January? 
What about NI contributions, do I need to do anything for that now?

Also, how much should I be putting aside? I am not earning much, barely covering my bills so it is difficult to know what to set aside right now. Is there a certain percentage I should be looking at? 

Thanks!

Jeremy535897

Your NI contributions are paid with your self assessment. If this is your sole income, and you are barely covering your bills, you don't need to set anything aside. You can earn £12,570 before paying income tax, but your previous employment will have used some or all of that. You can earn £6,515 profit before paying class 2 NI, and £9,568 before paying class 4 NI.

Going forward, in a tax year when your sole income is self employment, if you put 20% of income aside that is a good start.

CKhalvashi

Jeremy535897 said:

Your NI contributions are paid with your self assessment. If this is your sole income, and you are barely covering your bills, you don't need to set anything aside. You can earn £12,570 before paying income tax, but your previous employment will have used some or all of that. You can earn £6,515 profit before paying class 2 NI, and £9,568 before paying class 4 NI.

Going forward, in a tax year when your sole income is self employment, if you put 20% of income aside that is a good start.

If a basic rate taxpayer, I'd recommend 40% of net income, if higher rate, 55%.

This makes the 'bonus' feel more valuable once taxes are applied.

For the other parts, yes, HMRC act retrospectively for businesses via self assessment.

Jeremy535897

CKhalvashi said:

Jeremy535897 said:

Your NI contributions are paid with your self assessment. If this is your sole income, and you are barely covering your bills, you don't need to set anything aside. You can earn £12,570 before paying income tax, but your previous employment will have used some or all of that. You can earn £6,515 profit before paying class 2 NI, and £9,568 before paying class 4 NI.

Going forward, in a tax year when your sole income is self employment, if you put 20% of income aside that is a good start.

If a basic rate taxpayer, I'd recommend 40% of net income, if higher rate, 55%.

This makes the 'bonus' feel more valuable once taxes are applied.

For the other parts, yes, HMRC act retrospectively for businesses via self assessment.

Someone just starting out doing freelance work, with no other income, is unlikely to need to be this pessimistic, or be in higher rates of tax.