Beginning Self Assessment Tax

joesanders95 wrote: »

However, as the tax year runs 6th April 19 to 5th April 2020 - does this mean in January 31st 2021 I only have to pay tax on February to 5th April 2020? If so this would be just £6500 and below threshold?

Did you earn anything in paid employment between 6th April 2019 and Feb 2020 (now) as that will also count toward your annual tax allowance which may take you over the threshold?

You have misunderstood how tax and Self Assessment works.

When you complete you tax return you include all taxable income. Whether tax has been deducted at source is irrelevant from this perspective.

Your Self Assessment liability is then calculated based on your total taxable income. Any tax deducted at source such as the PAYE tax from the job is then deducted* leaving you with a net amount to pay (or refund due to you).

Don't forget that your Self Assessment liability can consist of upto five elements, some of which probably won't apply to you but some will, definitely the first three although Class 4 NIC may not be due for the first year due to relatively low profit as it's only a part year for your business.

Income tax
Class 2 National Insurance
Class 4 National Insurance
Student Loan
High Income Child Benefit Charge


*assuming you complete the return correctly and include the tax figure

How does the self assessment calculate tax I've paid under PAYE?

It doesn't, you include the tax figure on your return.

Would I enter this earnings under a certain section?

Yes. When you start your return you have to say which sections apply (most won't) so in your case you will need the employment and self employment pages. You include the tax deducted on the employment page along with your taxable pay from your P60 and any other relevant details such as company benefits.