Employee to Self Employed Tax Return

jbomb

Hey folks,

in the tax year 21-22, I was an NHS employee until July, when I left to be self employed, so three months as an employee and nine months working for myself.

I've just filled out my self assessment and obviously had to declare these employee earnings and the tax already paid on them at source.

However, its showing in my Total Income on which tax is due, and the tax I've already paid on it is showing as a deduction. 

This is my first time filling out a tax return and I'm SO CONFUSED! I don't understand why it's been taken into account as an earnings when I've already paid the tax on it. As a result, it's pushed my taxable profit up by 6k. So now instead of it being 4k (my self employed profit was 16 and then minus the 12.5 allowance) it's 10. I'm boiling my head here 

If anyone has any valuable advice nuggets Id be very grateful, 

Thank you!

Jenna 

[Deleted User]

You pay tax on all earnings and will be given credit for tax deducted at your employment. You only get one personal allowance and you would have used one quarter of it at your employment - 3/12. Do you believe that you get a personal allowance against both sets of income?

jbomb

No I am genuinely confused. It's not hard to confuse me. And I've never done a tax return before. I assumed that the tax I'd already had taken off my income when I was an employee, covered the wage I'd made there. Is that not why I payed tax on it in the first place? 

So I made 6k in this NHS for those three months, paid 475 tax on it, but the 6k is showing in taxable income, even though i've paid tax on it already through my previously salary. I didnt think that chunk would then be taken into account for my self emplyed, self assessment, 

[Deleted User]

You have a personal allowance of 12570. You used 3/12 of it at your NHS job. 

You have 9/12 of it left. Your self employment tax cannot be based on 16000 - 12570 as you have no longer 12570 available. Some of it was used against your NHS income. 

jbomb

So thats an aspect I hadnt even thought about, so thanks for that!

But why does the NHS earnings show as taxable when Ive already paid the tax on it through my salary, am i paying tax on that twice?! Im really trying not to be difficult, taxes, quite evidently are my new krypronite. 

[Deleted User]

You have already paid tax on it and. As you mentioned in your first post, receive full credit for the tax deducted. 

Let’s say that your NHS income was your only income in the tax year. You would receive a full refund of the tax paid as the earnings were below the personal allowance for the year. 

But it wasn’t - you had an additional £16000 income. So - we check, taking into account the £475 tax already paid, what you now owe. 

You must also remember that, as a self employed person, you are required to pay Class 2 and Class 4 NIC which will be in the calculation. 

sheramber

Your taxable income for the year are your total income for the year- employment and self employment

total income is 6k +16k =22k  -12500  personal allowance.

It works the same is you had earned 22k all from employment or all from self employment.

Tax due is calculated on your total income and then tax already paid is deducted from the total tax due leaving a balance payable.

jbomb

I GET IT NOW!   Thank you! I knew it would be right, i just didnt get HOW. Appreciate it, have a good day!