Paying National Insurance as a newly starting out Sole Trader?!

stayfrostea

Dazed_and_C0nfused said:

stayfrostea said:

Marcon said:

stayfrostea said:

Kim1965 said:

You will pay 9. 7% ní on profit over 11.9k i think. Cis at 20% may not cover the ní, will all your income come from customers who deduct cis?? If not you are better saving some towards the ní bill as you earn.
Keep tabs on the cis deductions and retain safely the cis vouchers for your accountants. By law you should get them monthly. Dont assume hmrc will know that cis has been deducted, you need the paperwork to prove it, its a poor systém that has caught mě out a few times....this is the construction industry. 
   

all my income will come from contractors, I only intend on sub-contracting, through CIS. If I continue with the work I am currently doing at the current rate I am on, my after tax salary will be around £50,000. I have only been subcontracting to this company for just under a month

If you follow the link I've given above that should explain the position. You can make payments towards tax and NI at any time once you've registered for online tax services, which I presume you've done/will be doing imminently?

I am registered for self-assessment. Unless there is something else I need to do I cannot see where I pay NI

You can make voluntary payments onto your Self Assessment account anytime you wish.

But the Class 2 & 4 NI is part of your Self Assessment calcualtion so won't actually exist until you file your tax return.  And even then it isn't actually payable until 31:01:2024 (for the current tax year).

You are running a business, you're not an employee so no NI has to be paid/deducted each time you are paid.

so will the calculation be made if I file a self-assessment for the 31/1/23 or in April?

Dazed_and_C0nfused

stayfrostea said:

Dazed_and_C0nfused said:

stayfrostea said:

Marcon said:

stayfrostea said:

Kim1965 said:

You will pay 9. 7% ní on profit over 11.9k i think. Cis at 20% may not cover the ní, will all your income come from customers who deduct cis?? If not you are better saving some towards the ní bill as you earn.
Keep tabs on the cis deductions and retain safely the cis vouchers for your accountants. By law you should get them monthly. Dont assume hmrc will know that cis has been deducted, you need the paperwork to prove it, its a poor systém that has caught mě out a few times....this is the construction industry. 
   

all my income will come from contractors, I only intend on sub-contracting, through CIS. If I continue with the work I am currently doing at the current rate I am on, my after tax salary will be around £50,000. I have only been subcontracting to this company for just under a month

If you follow the link I've given above that should explain the position. You can make payments towards tax and NI at any time once you've registered for online tax services, which I presume you've done/will be doing imminently?

I am registered for self-assessment. Unless there is something else I need to do I cannot see where I pay NI

You can make voluntary payments onto your Self Assessment account anytime you wish.

But the Class 2 & 4 NI is part of your Self Assessment calcualtion so won't actually exist until you file your tax return.  And even then it isn't actually payable until 31:01:2024 (for the current tax year).

You are running a business, you're not an employee so no NI has to be paid/deducted each time you are paid.

so will the calculation be made if I file a self-assessment for the 31/1/23 or in April?

It will be when you file the return, once you complete it you can view the calcualtion straight away.

So on 6 April 2023 if you want to for the 2022:23 tax year.  But no NI will have to be paid until 31 January 2024.

Marcon

stayfrostea said:

Dazed_and_C0nfused said:

stayfrostea said:

Marcon said:

stayfrostea said:

Kim1965 said:

You will pay 9. 7% ní on profit over 11.9k i think. Cis at 20% may not cover the ní, will all your income come from customers who deduct cis?? If not you are better saving some towards the ní bill as you earn.
Keep tabs on the cis deductions and retain safely the cis vouchers for your accountants. By law you should get them monthly. Dont assume hmrc will know that cis has been deducted, you need the paperwork to prove it, its a poor systém that has caught mě out a few times....this is the construction industry. 
   

all my income will come from contractors, I only intend on sub-contracting, through CIS. If I continue with the work I am currently doing at the current rate I am on, my after tax salary will be around £50,000. I have only been subcontracting to this company for just under a month

If you follow the link I've given above that should explain the position. You can make payments towards tax and NI at any time once you've registered for online tax services, which I presume you've done/will be doing imminently?

I am registered for self-assessment. Unless there is something else I need to do I cannot see where I pay NI

You can make voluntary payments onto your Self Assessment account anytime you wish.

But the Class 2 & 4 NI is part of your Self Assessment calcualtion so won't actually exist until you file your tax return.  And even then it isn't actually payable until 31:01:2024 (for the current tax year).

You are running a business, you're not an employee so no NI has to be paid/deducted each time you are paid.

so will the calculation be made if I file a self-assessment for the 31/1/23 or in April?

Might be an idea to get some basic advice from a local accountant to ensure you have everything correctly set up and understand from the outset how things 'work'. Getting things right will be a lot cheaper than putting them right at a later date.

Kim1965

Have a business account and a sub account and put aside money towards yout ní. If your earnings 50k, cis wont 
Cover tax and ní, if all your income is from contractors using cis, then save an extra 10% of your labour bill each month. That way you will have money to cover the tax/ni demand. 
Get your tax return in as early as possible, at the end of the tax year in April, that way you have 8 months to sort out any gliches.
If none of this makes sense, talk to a plain speaking accountant. 
 I can now work out my tax /ni liability to within a few quid... But ihave been s/e for 25 yrs. 
 

Bimbly

I wonder, from what you said, if 20% from *all* of your income is being taken for income tax. Without taking into account your personal allowance of £12,570 on which no income tax is payable.

So, over the course of a year, you will have paid £2514 in income tax on that first £12,570 which is not due. This is all sorted out when you do your tax return. You get this tax back, but if you have NI to pay, that money can be used to pay the NI. I assume this is what others mean by it all working out at the end of the year.

Best bet, as above, is to do your tax return in April as soon as you can so you can see where you are. This first year, you may also have some employment income in the mix and, potentially, some taxable redundancy money (if your payout was over £30k)

Kim1965

Thing is, op saying he will earn 50k AFTER 20% deducted so will be higher rate. Depends what expenses he incurs.