What to do? Self employed/Ltd Company/Umbrella company

ZinKep

Hi there,

I have recently managed to gain employment in the "freelancing" industry - I have not worked since 2005 (Motherhood - two kids under two) I don't earn much per month, roughly between 600-800 per month. My question is, what should I do with regards to Tax/NI? Having been an employee for most of my adult life, I have no idea what to do, who to tell and what I should be doing tax wise. is it as simple as claiming myself self-employed and filling in a tax return? I have as of yet only received two months money and was planning on "winging" it until April - but my conscience is getting the better of me and feel I should declare my earnings somewhere. Also, to add to this mire, my husband and I are currently with Payplan - will I need to declare to them my earnings? As this work is not always guaranteed - I was planning on saving a lump sum to give yearly to Payplan, that way my earnings are not relied upon to cover our outstanding debt. Can anyone give me advice? I feel like I am going around in circles here...

Many Thanks

:mad:

ali1972

In all honesty, I would just phone the Inland Revenue and ask. You don't have to give your name for a basic query like that and you'll get an honest answer. You can get caught out if the companies paying you are being inspected by the IR themselves and payments to you are revealed which you are not declaring. Although £800 a month doesn't seem much to you, it's still significant to the IR. If you need to register as self employed (and I think you will, being self employed myself) you will probably be able to apply to defer Class 2 N.I. contributions if you only expect to make a few thousand pounds a year. Because your income will be well below £15,000 a year you should be able to just fill in a simple expenditure section on the tax return. Make sure you are keeping receipts for expenses (such as any stationary, postage, fares, portion of your internet access bill, phone bills, whatever is relevent.) When expenses are deducted you pay tax and NI on the remainder (which constitutes your actual income). With your personal allowance of circa £5,000 (can't remember what the exact figure is) you will be paying very little in NI and tax after expenses are deducted. As far as being self employed goes, you have to actually register with the IR, rather than just declare yourself self employed. But it's very, very easy and the IR are very helpful when people actually approach them for advice.

Hope that helps - let me know if it doesn't!

dekh

Hi ya,

I went self employed 5 years ago. Not regretted it yet.

Get in touch with the Inland revenue and tell them.

You need to be paying Class 2 NI - not as bad as it sounds - £2 per week or someting like that. Ask them for a DD form.

Keep receipts for everything you spend that could possibly be related to your business... postage, stationary. If you have a home office a percentage of your fuel bills. If you have a car then either the percentage of all running cost used for business or 40p per mile used for the business. This you can only choose once and have to stick with it. So if you do a lot of mileage and your car is gonna depreciate hugely this year then the former, if not the latter but you have to then stick to the chosen method. (Thieving government haen't upped this 40p in 5 years.) Anything at all you can offset against tax. PI insurance PL insurance anything.

Come April you will get tax return forms. It isn't dificult to fill in you DO NOT need an accountant. The Inland Revenue may help you fill it in first time round. Get that back to them before EO September. It is basucally total different types of receipts in some boxes, total your invoices in another. Wait for the bill. This will be for Income tax and Class 4 NI. Pay that January 31st + next payment July.

One thing, if you don't tell them and you are earning, and they find out it won't be a pleasing experience.

I've always found the Inland Revenue pretty helpful. This is not what I've heard about the VAT man though. (Un)fortunately I don't earn enough to interest him.

Hope this helps.

ali1972

You can also get account books from WH Smiths specifically for self employed people which already have all the right columns for expenses and helpful notes. I always file my tax return online as it does all the hard work for me, has helpful notes to click on, and you can keep going back to it and tinker with it without actually submitting it until you want to. Also, it means I can file it as late as January 31st.

ManAtHome

dekh wrote: »

I've always found the Inland Revenue pretty helpful. This is not what I've heard about the VAT man though. (Un)fortunately I don't earn enough to interest him.

Most of the VAT men (and women) are also reasonable people. Seems to be a standard Revenue rule - if you don't take the p1ss, they won't either...