Working out my taxes as self employed

Fedcas65

eskbanker said:

Fedcas65 said:
Interesting, so basically the amount "saved" with being self-employed could go in the private pension (or in my pocket for further private investments), the numbers quite match my current pension contribution, so it makes sense for me to be self-employed if I take at least 575 per day, but registered how? Shall I open my private limited company or as sole trader?

After a quick search, a private limited company is much better, though I may need to wait a couple of weeks for the story of dividends/PAYE and the VAT.

As above, there are pros and cons of sole trader versus limited company, and you'll find plenty of articles by searching for those five words, including a simple table at https://www.gov.uk/set-up-business

In terms of comparing employment income with self-employed, pension contributions are indeed an important consideration but there are plenty of others to factor into the evaluation, including holiday pay, sick pay, insurance, accountancy costs, etc, which can and do eat into the apparently substantial variance between headline day rates.

Thank you, yes, I already accounted the holiday, sick pay, accountancy cost, unfortunately I won't get benefits so something extra will be there, but it won't break the bank account, it's still widely manageable.

Fedcas65

Question, I'm not sure if another thread is better for this, but what kind of figure/person would be the best to introduce me to this world of being self-employed? Or even drive me through? I don't want to make mistakes, despite I'm trying as hard as possible to get all the info but I don't want to go mad and leave out thing behind at the same time.

I've been reading all the government resources and I've got the following questions:

1. In this financial year, I'd be employed for 10/12 months, if I register the company now, what would happen next? Shall I do my tax assessment and how it would be calculated in the case I don't find any "contract" job up to the end of the financial year? I want to register the company now because I don't want to apply for jobs and I'm not ready with my company
2. It seems that a ltd company is what I need, but there are too many things to know, like the immediate next steps, I should get my unemployment insurance for a while, in my knowledge is not taxed, but what about me having a ltd company?
3. I'd register the company at home and that would luckily be the location of my work, but it may change with different contracts in future (either partially or absolute)
4. Do I need any special insurance? My home insurance may not pay for customers etc, gladly no one will come here as I work remote, but I may also visit customer locations, maybe even regularly, so does my home count as location of business? Does it go in percentage of weekly hours of work? In that case, I need to inform my home insurance to see if they cover it
5. What about my mortgage? I know I need to phone the bank, but I don't want to end up in a situation where I already registered the company and then I'll get serious irreversible troubles with either the home insurance or the mortgage itself
6. CGT in case of sale... In my situation, as I may need to sell my house soon, apparently I need to pay taxes if one room is dedicated to the job, well it's obvious that one room is a office and that's valid for pretty much everyone out there, but I may always declare that I work wherever with my laptop, so how would that work? More importantly, I don't have only my office hardware there, I also have my stuff, other monitors, my computer etc...
7. VAT... These are the criteria. You must register if either:
- your total taxable turnover for the last 12 months goes over £90,000 (the  VAT  threshold).- you expect your taxable turnover to go over £90,000 in the next 30 days.If I consider the gross income of my current year as employed, it doesn't go over 90kI can't expect to get 90k in the next 30 days, but I may expect to get more than 90k in the next 12 months, or next financial year as we're close to it, would that count?
8. I want to register as PAYE and I also want to be able to pay dividends, so as employer I pay dividends to me, do you know any accountancy service that makes this easy? I can't go crazy for this stuff, on the paper it seems all easy, but as there are fines for any mistakes, I need to make the entire story super easy, whatever is the cost... It has to be painless. Gemini says the following about the leverage between PAYE and dividends, is it correct? The Optimal Hybrid Strategy (2025/26 Tax Year)
   Most accountants recommend a combined approach to maximise take-home pay and secure future state benefits. 
   • Pay a small salary up to the personal allowance threshold (often £12,570 for 2025/26). This ensures you gain qualifying years for your State Pension without incurring significant Income Tax or NICs.
   • Extract the remaining funds as dividends from the company's post-tax profits. This portion benefits from the lower dividend tax rates and the annual tax-free dividend allowance (£500 for 2025/26). 
   This strategy provides the stability and benefits of a salary while leveraging the tax efficiency of dividends, resulting in a lower overall tax burden for the director and the company. 
9. I may not become a contractor after all, which means I may become an employee again, so I wonder if the costs in the order of hundreds of pounds is all I need to open the company, I just hope I didn't miss anything that it's in the order of a few thousands, because that would crack me down, thanks.

If I need another thread for all this, just let me know.

QrizB

What line of work are you expecting to be in?

Will you be dealing with the public, or with other businesses?

Fedcas65

QrizB said:

What line of work are you expecting to be in?

Will you be dealing with the public, or with other businesses?

I'd be working in IT, fully remote in most cases I guess, but I may need to go to the office twice a week for some customer in future, so things may change.

I won't be dealing with the public directly, unless the company has services that serves the public sector, but I don't think it impacts me as I'll be dealing with the company, not their clients.

In most cases, I'd be dealing with businesses that provide whatever service to their customers/clients, can be an online food shop, a social network, network operator, whatever...

eskbanker

Fedcas65 said:

Question, I'm not sure if another thread is better for this, but what kind of figure/person would be the best to introduce me to this world of being self-employed? Or even drive me through? I don't want to make mistakes, despite I'm trying as hard as possible to get all the info but I don't want to go mad and leave out thing behind at the same time.

There's no harm in asking individual specific questions about tax on a forum like this, but if you're looking for a comprehensive beginner's guide to contracting then your best bet will be to research extensively online, as there are resources at many sites like:

http://www.contractoruk.com/
https://www.itcontracting.com/

If you're after a more personal service then they'll be able to point you in the right direction....