Self Employed?


G

Gav

I am in full time employment and have just started doing a few jobs in my
spare time for some extra cash. I am right in thinking I need to register as
Self Employed due to this work I am doing? If this is the case what are the
implications?

thanks

Gav
 
R

Ronald Raygun

Gav said:
I am in full time employment and have just started doing a few jobs in my
spare time for some extra cash. I am right in thinking I need to register
as Self Employed due to this work I am doing?
Not necessarily. If it's just a few odd jobs, just declare the extra
income as "casual earnings" in the "other taxable income" bit of the
tax return (box 13.1 in the full return or box 7.1 of the short return).

If you don't already get a tax return form, you will need to ask for
one, or otherwise tell the taxman about your extra income, and they'll
probably send you one. If you did register as self-employed, you would
probably be sent a return anyway.
If this is the case what are the implications?
You would need to fill in te self-employemnt pages of the tax return.
You would need to pay extra tax on your SE profit (but you'd need to
do so if treated as casual earnings anyway). You would need to pay
class 4 National Insurance Contributions at the rate of 8% of your SE
profits (to the extent that they exceed £5035 in the 2006/7 tax year).
You would need to pay class 2 NICs at the rate of £2.10 per week.
 
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G

Gav

Ronald Raygun said:
Not necessarily. If it's just a few odd jobs, just declare the extra
income as "casual earnings" in the "other taxable income" bit of the
tax return (box 13.1 in the full return or box 7.1 of the short return).

If you don't already get a tax return form, you will need to ask for
one, or otherwise tell the taxman about your extra income, and they'll
probably send you one. If you did register as self-employed, you would
probably be sent a return anyway.


You would need to fill in te self-employemnt pages of the tax return.
You would need to pay extra tax on your SE profit (but you'd need to
do so if treated as casual earnings anyway). You would need to pay
class 4 National Insurance Contributions at the rate of 8% of your SE
profits (to the extent that they exceed £5035 in the 2006/7 tax year).
You would need to pay class 2 NICs at the rate of £2.10 per week.
 
G

Gav

Not necessarily. If it's just a few odd jobs, just declare the extra
income as "casual earnings" in the "other taxable income" bit of the
tax return (box 13.1 in the full return or box 7.1 of the short return).
My first month of doing this I've earn't £1100 so its probably not going to
count as a few odd jobs. Although I don't expect anything near that amount
every month.
If you don't already get a tax return form, you will need to ask for
one, or otherwise tell the taxman about your extra income, and they'll
probably send you one. If you did register as self-employed, you would
probably be sent a return anyway.


You would need to fill in te self-employemnt pages of the tax return.
You would need to pay extra tax on your SE profit (but you'd need to
do so if treated as casual earnings anyway). You would need to pay
class 4 National Insurance Contributions at the rate of 8% of your SE
profits (to the extent that they exceed £5035 in the 2006/7 tax year).
You would need to pay class 2 NICs at the rate of £2.10 per week.
So if I understand you correctly as soon as I register as SE I will pay
£2.10 per week (class2).

At the end of the year I will have to pay 8% on any earnings over £5035.
When you say profits do you mean after income tax?

Sorry if these are basic questions, never filled in a tax return before.

Gav
 
R

Ronald Raygun

Gav said:
So if I understand you correctly as soon as I register as SE I will pay
£2.10 per week (class2).
You will probably be charged retrospectively from when you began being
self employed. You must register within (I think) 3 months of starting,
if you leave it later there may be a penalty to pay.

Typically you would pay ongoing C2NI (now £2.20 pw) by monthly DD of
varying amounts of either £8.80 or £10.10 per month depending on how
many NI weeks there are in the month.
At the end of the year I will have to pay 8% on any earnings over £5035.
C4NI is collected with your income tax. After the end of the tax year
(5th April 2007) you have until October 2007 to complete your tax return
in respect of your earnings during the 2006-07 tax year, and then until
the end of January 2008 to pay the tax. You may also be required to make
a "payment on account" by the end of July 2008 to cover about half your
anticipated tax/ni bill for 2007-08.
When you say profits do you mean after income tax?
I'm afraid income tax is not an allowable expense. So in effect your
marginal rate of taxation will be 30% of your profit (22% IT + 8% C4NI),
or even 48% if your total income (from employment, self-employment,
interest, etc, etc) pushes you over the higher rate tax threshold.
 
T

Tim

... After the end of the tax year (5th April 2007) you
have until October 2007 to complete your tax return
My "Notice to complete a Tax Return" from HMRC says 31 January 2008! ;-)
 
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R

Ronald Raygun

Tim said:
My "Notice to complete a Tax Return" from HMRC says 31 January 2008! ;-)
Only if he wants to work out his own tax bill, which I've assumed that
as a rookie he would rather not.
 
T

Tim

Only if he wants to work out his own tax bill, which
I've assumed that as a rookie he would rather not.
He can do it online by 31/1/08 and still let the taxman do the calcs, can't
he?
;-))
 
R

Ronald Raygun

Tim said:
He can do it online by 31/1/08 and still let the taxman do the calcs,
can't he?
;-))
I doubt it. The system will probably go down for routine maintenance
from the middle of December for a week, will hit unforeseen snags, and
won't be up again until the middle of January, by which time he'll be
competing with a million other taxpayers who all thought they'd beat
the last minute rush by doing their online tax during the XNY break.
 
P

Peter Saxton

You will probably be charged retrospectively from when you began being
self employed. You must register within (I think) 3 months of starting,
if you leave it later there may be a penalty to pay.

Typically you would pay ongoing C2NI (now £2.20 pw) by monthly DD of
varying amounts of either £8.80 or £10.10 per month depending on how
many NI weeks there are in the month.
£8.80 or £11.00.
 
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M

Martin

So if I understand you correctly as soon as I register as SE I will pay
£2.10 per week (class2).

At the end of the year I will have to pay 8% on any earnings over £5035.
Note that the total NI payable (class 1, 2 & 4) is capped - so exact amount
payable will depend on your total s/e and employed income in each tax year.
(The 1% NI on "everything above..." is not capped, though.) You will need to
apply to HMRC to reclaim any excess NI paid.

It's also possible HMRC will reduce your PAYE tax code, to collect tax on
anticipated s/e earnings.
 

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