Employed & submitting a self assessment tax return for second income - confused.

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dizzy078_2
dizzy078_2 Posts: 8 Forumite
in Cutting tax
Hello,


I have a regular job (I earned 19k for the financial year I am submitted tax return for) and also an online business to earn a bit of extra money. I have been going through the self assessment tax return online and the "calculation" at the end has come up with a figure of £1378 tax due on my additional income.


I earned approximately £6700 with costs of £2700, so £4000 profit.


£1378 works out at about 20% tax on my revenue for the business.


I thought I would be paying tax on the profits of the business.


Am I wrong? First time submitting it & very confused.


Thanks for any help/advice.
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  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    it all comes down to whether you have put the correct numbers in the correct boxes

    as you are doing it online, you can go back and amend it as many times as you want

    have you made sure the employment income is entered correctly? Why not start from scratch and only enter the employment income. You should get £0 tax liability. if you don't then you know where the problem is

    then add on your self employment. As you say, you should be taxed on profit, not income. have you ticked the right boxes in respect of NI (you are below the threshold so won't pay it, unless you opt in voluntarily...?)
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    If you post the details of the tax calculation then it will be easier to identify where the problem (if there is one) lies.

    Did your tax code include any expenses or anything else at all other than the standard Personal Allowance (if not it would have been 1150L).

    If it did then there are a couple of possibilities. You've forgotten to include the relevant information on the return. Or those (provisional) entries in your tax code turned out to be wrong and you owe additional tax over and above that arising on the self employment profits.

    Don't forget there might be student loan and National Insurance elements to pay through your Self Assessment bill.
  • Pennywise
    Pennywise Posts: 13,468 Forumite
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    00ec25 wrote: »
    have you made sure the employment income is entered correctly? Why not start from scratch and only enter the employment income. You should get £0 tax liability. if you don't then you know where the problem is

    Excellent advice. Break it down into each separate section and look at the tax computation as you go along. That way you can see the effects every time you enter something and it will highlight where the difference arises.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    I am wondering if the £1378 is the liability for the year or whether it also comprises a payment on account for 2018/19.
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    Very good point.

    But can the total (balancing payment and even just first POA) be less than £1,500?
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    Dazed_and_confused wrote: »
    Very good point.

    But can the total (balancing payment and even just first POA) be less than £1,500?

    That's an even better point! :T
  • dizzy078_2
    dizzy078_2 Posts: 8 Forumite
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    Thank you for suggestions everyone. It turned out to be my student loan (charged at 9%, damn!). At least it's not tax and the loan will whittle down...


    It also asks me on the return whether I want to contribute to national insurance (£80-90) for the year. Do you know of any drawbacks if I don't pay? Will I not be entitled to a full state pension if I don't?


    Ta :)
  • badmemory
    badmemory Posts: 7,791 Forumite
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    Aren't you already paying NI on your regular job? Or have I misread something?
  • dizzy078_2
    dizzy078_2 Posts: 8 Forumite
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    I am. On the tax return it says I have an option to pay extra NI. I'm just not sure what are the pros and cons to paying/not paying. I'll probably end up ringing the tax office tomorrow and asking them.
  • nick74
    nick74 Posts: 829 Forumite
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    edited 21 November 2018 at 12:43PM
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    As you will be building up your entitlement to a full state pension through the class 1 NI contributions on your £19k salary, then paying self employed class 2 contributions in addition to that in the same tax year would be pointless. There are no pros, it would simply be money down the drain.
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