Setting Myself up as Self Employed - First Time!

fulhamnonny

Hi Everyone,

I'm looking for some advice.

I have 2 big changes coming up in the next 5-6 weeks both of which are pretty scary but exciting at the same time.

1. I'm changing careers. I'm going into healthcare in which the area I work in everyone is generally self employed. Since leaving University the first time I've been an employee so on PAYE, so have no idea where to start in terms of the business side. I see MSE has a page on the best business bank accounts, but as I don't have any invoices yet I can't seem to open one.

2. I am moving out of my own which I own and in with my partner who lives in different part of the UK to where I'm currently based. Rather than sell, I've decided to rent my home out. I've decided to get my managed by the estate agent for now until I get used to how things work and also my new career. They have already found tenants in which they are moving in at the end of April.

For my career, I am registered and have insurance (it's a requirement). So far I have one place lined up who will try and give me 4 hours of work for 1 day, which suits me until I leave my current job. They have said I will need a PDQ. For renting my home, I've had the EPC, EICR, Gas cert done and aware I'll need landlord insurance.

When I finally leave my job I'm aware I'll need to start filling in a tax return, but other than what I've mentioned I have no clue about what else etc I need to do for both in terms of getting myself set up and knowing if there is anything else I need to be doing and this is where I need your help!

Is it worth keeping the rental income separate from my healthcare income?

Is there anything I'm missing?

Thanks.

Bookworm105

fulhamnonny said:

Is it worth keeping the rental income separate from my healthcare income?

if you mean physically separate then no, there is no need
obviously however you must record the two income streams separately in your accounts.
There are separate sections on your tax return where you have to declare the income and expenses of each stream since the profits have to be calculated for each one according to the relevant rules 

(and don't overlook that in the first tax year you may still have employment income which also must go on the tax return that year - eg p45 details)

don't miss the tax registration date or you will get a penalty
Check how to register for Self Assessment - GOV.UK

spend a lot of time learning (or pay an accountant instead)
HMRC email updates, videos and webinars if you’re self-employed - GOV.UK

HMRC email updates, videos and webinars for landlords - GOV.UK

Mr.Generous

On the rental side set up a simle spreadsheet to record details of all expenses. When it comes to tax return time you can simply click the column and the autosum will give you the value of expenses. Use about 4 or 5 columns so your expenses are split by category I use maintainance, legal and professional, utilities and motoring mileage. It's easier to update as you go along than track back at tax return time. Mortgage costs could be a category.

If the PDQ is a card machine I don't know why you need one unless it's to bill your new clients. 

Bookworm105

Mr.Generous said:

. Mortgage costs could be a category.

you certainly need that as a figure to enter on your tax return under the financing costs box, but not as an expense when calculating your rental profit.
Let us hope OP does some learning ....

Mr.Generous

Bookworm105 said:

Mr.Generous said:

. Mortgage costs could be a category.

you certainly need that as a figure to enter on your tax return under the financing costs box, but not as an expense when calculating your rental profit.
Let us hope OP does some learning ....

No you don't, you might need it if you have financing costs.

Bookworm105

Mr.Generous said:

Bookworm105 said:

Mr.Generous said:

. Mortgage costs could be a category.

you certainly need that as a figure to enter on your tax return under the financing costs box, but not as an expense when calculating your rental profit.
Let us hope OP does some learning ....

No you don't, you might need it if you have financing costs.

you said mortgage costs, it is therefore vital that O understands you cannot claim capital repayment element against tax, but any interest paid on the loan is a financing cost (mortgages are not free!!!)
That has special tax treatment for residential property letting so must not be "mixed in" with the other expenses.

keeping your own itemised records of expenditure is sensible monitoring of the business performance, but for tax purposes you are only required to declare a total cost figure (excluding financing!) 

Mr.Generous

Bookworm105 said:

Mr.Generous said:

Bookworm105 said:

Mr.Generous said:

. Mortgage costs could be a category.

you certainly need that as a figure to enter on your tax return under the financing costs box, but not as an expense when calculating your rental profit.
Let us hope OP does some learning ....

No you don't, you might need it if you have financing costs.

you said mortgage costs, it is therefore vital that O understands you cannot claim capital repayment element against tax, but any interest paid on the loan is a financing cost (mortgages are not free!!!)
That has special tax treatment for residential property letting so must not be "mixed in" with the other expenses.

keeping your own itemised records of expenditure is sensible monitoring of the business performance, but for tax purposes you are only required to declare a total cost figure (excluding financing!) 

OP hasn't mentioned having a mortgage. A lot of property is owned outright, and a high percentage of buy to let homes are also owned outright. Buy to let does not automatically mean a mortgage. You would need to include it IF you have finance, that's why I said could be included.

Bookworm105

Mr.Generous said:

Bookworm105 said:

Mr.Generous said:

Bookworm105 said:

Mr.Generous said:

. Mortgage costs could be a category.

you certainly need that as a figure to enter on your tax return under the financing costs box, but not as an expense when calculating your rental profit.
Let us hope OP does some learning ....

No you don't, you might need it if you have financing costs.

you said mortgage costs, it is therefore vital that O understands you cannot claim capital repayment element against tax, but any interest paid on the loan is a financing cost (mortgages are not free!!!)
That has special tax treatment for residential property letting so must not be "mixed in" with the other expenses.

keeping your own itemised records of expenditure is sensible monitoring of the business performance, but for tax purposes you are only required to declare a total cost figure (excluding financing!) 

OP hasn't mentioned having a mortgage. A lot of property is owned outright, and a high percentage of buy to let homes are also owned outright. Buy to let does not automatically mean a mortgage. You would need to include it IF you have finance, that's why I said could be included.

and i simply drew attention to how to treat it if it is, as getting it wrong would be very costly in HMRC terms.
 You seem to have got off on the wrong foot.

LITRG

Hi
If you are starting self-employment for the first time then you might find our self-employment guide helpful: https://www.litrg.org.uk/working/self-employment/self-employment-guide . All the best with your new business.