Self-employment tax is 30% of profit 3 July 2022 at 12:56PM in Cutting tax 13 replies 282 views

user19860331

I posted a thread on here several months ago (https://forums.moneysavingexpert.com/discussion/6349484) but thought it'd be easier to start a new one with an update.

So basically I was advised to temporarily set my self-employment profit to £0 to determine if I'd underpaid any tax in my full-time job(s), as I'd recently switched from one full-time role to another.

If I do that, HMRC says I owe £307, so I'm guessing my previous job I'd underpaid tax by this amount.

But then if I add my self-employment figures back on, it says I owe £907 tax.

So it's saying I owe £600 tax for around £2000 profit of self employment.

This seems like a lot? That means 1/3 of my profit would be getting taxed?

InMyDreams

Are you repaying a student loan?

user19860331

InMyDreams said:

Are you repaying a student loan?

Ah yes I am actually... is it possible to see how much of my payment is going towards that?

Im pretty sure I pay it off in my wages from my FT job also

Dazed_and_C0nfused

user19860331 said:

InMyDreams said:

Are you repaying a student loan?

Ah yes I am actually... is it possible to see how much of my payment is going towards that?

Im pretty sure I pay it off in my wages from my FT job also

The Self Assessment calculation breaks down any tax, NI, student loan and HICBC due 

user19860331

Dazed_and_C0nfused said:

user19860331 said:

InMyDreams said:

Are you repaying a student loan?

Ah yes I am actually... is it possible to see how much of my payment is going towards that?

Im pretty sure I pay it off in my wages from my FT job also

The Self Assessment calculation breaks down any tax, NI, student loan and HICBC due 

Thanks!

So I've realised that I'm paying £151 student loan from my full time job, and another £186 of student loan from my self-employment earnings.

So I imagine that means my self-employment tax is £414 (possibly with NI also? I'm not sure)

Does that sound about right? It's still more than I'd expect to be paying, but I'm confused and tired and tempted to just submit the form and pay it... think it's consumed enough of my time now!

InMyDreams

That sounds about right if your self employed earnings are £2070.
Student loan will be 9%.
£2070 x 9% = £186.30
£2070 x 20% = £414.

No NI on £2070 self employed earnings.

user19860331

InMyDreams said:

That sounds about right if your self employed earnings are £2070.
Student loan will be 9%.
£2070 x 9% = £186.30
£2070 x 20% = £414.

No NI on £2070 self employed earnings.

Thank you for clarifying!

Does anyone know if I need to pay my tax all in one go? or can I pay some now and some further down the line?

purdyoaten2

user19860331 said:

InMyDreams said:

That sounds about right if your self employed earnings are £2070.
Student loan will be 9%.
£2070 x 9% = £186.30
£2070 x 20% = £414.

No NI on £2070 self employed earnings.

Thank you for clarifying!

Does anyone know if I need to pay my tax all in one go? or can I pay some now and some further down the line?

2021/22 liability is payable by 31st January 2023. Interest will be charged on any amount not paid by that date and a 5% penalty levied if not paid by 28th February.

user19860331

purdyoaten2 said:

2021/22 liability is payable by 31st January 2023. Interest will be charged on any amount not paid by that date and a 5% penalty levied if not paid by 28th February.

Thanks, I understand that but I mean could I pay 50% now and then 50% in November for example?

purdyoaten2

You can and receive a tiny amount of interest but it’s not due at all until 31January 2023. 

Dazed_and_C0nfused

purdyoaten2 said:

You can and receive a tiny amount of interest but it’s not due at all until 31January 2023. 

I don't believe interest is payable in that situation as the payment isn't strictly needed.

If it had been allocated against a charge with an earlier due date and then moved to the 2021:22 Balancing Payment then interest would be paid.