New to Self Employment

_Dolly_Rocker_

Hey all, 

So I am new to this self employed thing and I have some questions that I know some on here will be able to help me out with!

Question 1 - Tax
I do work full time with an income of around £22k per year and I have started my own dog walking business to work around this job. 

I've got a spreadsheet and I am going to keep aside 25% of my earnings for tax, I think I do only need to pay 20% but want to keep a bit extra as a buffer. Don't want to get a tax bill at the end of the year that I can't afford. Is this a sensible way to do it or should I keep some more aside? 

Question 2 - NIC
If my profits are at least £6,515 I need to pay £163.80 for the 2022/23 tax year. I don't see me earning this much but I'll keep that amount aside anyway just incase. 

Question 3 - Expenses
So I will have some expenses, insurances etc. Do I pay these out of the total amount I make or do I deduct this amount from the tax I pay each year? Very confused about this one? 

Also I do some admin from home, can I claim for gas, electricity, internet, mobile? I use the car, how much of my car insurance can I write off as an expense? 

Think that's it for now!

Thank you!!!

MalMonroe

Hi, there's a lot of information here from the government -

https://www.gov.uk/working-for-yourself

'Also I do some admin from home, can I claim for gas, electricity, internet, mobile? I use the car, how much of my car insurance can I write off as an expense?'

Yes, you can. You need to work it out carefully - which rooms you use, etc. 

My daughter and I both work from our home, in different rooms and have to calculate our separate usage. It's a bit of a pain sometimes but worth doing.

We each keep a spreadsheet, like you and we save 30% of our earnings in a separate account, just in case - it's always nice to have a good cushion. 

If you haven't already registered for your HMRC account, that's a good thing to do as you can submit your returns there and send messages to HMRC if there's anything you're not sure about. 

https://www.gov.uk/log-in-register-hmrc-online-services

SensibleSarah

I personally set aside a third (i.e. 33%) of my self-employment income to cover tax, NI and student loan repayments - that's definitely overkill and has left me with a nice buffer at the end of the 21-22 tax year, which will really come in handy in the coming months. Thankfully 67% of my total income is enough for me to live on. If it wasn't then I'd be a lot more exact in my calculations!

I started a dogwalking business a few years ago to help fill a career break that I took for a few months. Expenses-wise I didn't claim anything for my vehicle (which was my personal daily driver as well as my unliveried dog van) apart from mileage and didn't bother claiming a percentage of home heating etc as the reality was that the small amount of admin I did at home was not worth the hassle of working it out. 
You take your allowable expenses off your total self-employment income before calculating tax - but you'll be asked for these figures when submitting self assessment anyway so don't worry too much about it. I found this calculator useful last tax year when I had some income from employment early in the year and then went self-employed full time - good for getting a rough estimate at least. https://www.employedandselfemployed.co.uk/tax-calculator