Self assessment side income tax expectations? 7 October 2022 at 2:02PM edited 7 October 2022 at 2:04PM in Cutting tax 2 replies 72 views

Hydromel

if i am:

- a basic rate tax payer with a PAYE main job

- plan 1 student loan, main job above repayment threshold

with a side income over the tax year that runs in excess of the £1,000 tax free trading allowance (requiring self assessment) is it the case that

- zero tax on the first £1,000 of the side income

- all amounts earned over £1000 be subject to 9% student loan tax as well 20% income tax? or does student loan not apply?

- would there also be 13.25% national insurance or not? or is it the case there is zero national insurance if the side income only over the year is less than 6,725?

what is the total % over the first £1000 amount that I would be liable for?

- 9+20+13.25 = 42.25%?
- 9+20 = 29%?
- 20% only?
- something else?

thanks for any information you can provide

Dazed_and_C0nfused

zero tax on the first £1,000 of the side income

Not necessarily no, you may not want to use the trading allowance so could have taxable profits of say £500.

- all amounts earned over £1000 be subject to 9% student loan tax as well 20% income tax? or does student loan not apply?

Student loan would be charged on any profits.  But this could be less than £1,000 as per response above.

- would there also be 13.25% national insurance or not? or is it the case there is zero national insurance if the side income only over the year is less than 6,725?

No.  NI charged on self employed profits is Class 2 and Class 4 not Class 1 so unless you wished to pay voluntary class 2 (highly unlikely to be necessary if you paying student loan on your PAYE income) you wouldn't have any NI to pay until you reached the Class 2 NI threshold.  Class 4 threshold is higher.

Also, Class 1 NI rate is reducing to 12% from November.

Jeremy535897

You need not declare self employment income unless the gross income exceeds £1,000. If the gross income exceeds £1,000, you can use the trading allowance of £1,000 or whatever the actual business expenses are. You would choose the bigger number. However, you have to register as self employed if your side income receipts exceed £1,000, and that means self assessment, and that means your income sources are all counted for student loan repayment purposes.