Paying tax for self employment

[email257525]

Dear Members and Experts

In the year 2009 to 2010, I have been working as an employee for five different employer on different periods but some times working for two employers at the same time (two jobs), and have been paying Tax and Ni through PAYE.

During the same year 2009 to 2010, I have been working for self employed as well just for three months, and Have been paying 2nd class Ni.

Now as the year 2009-2010 has finished, I want to pay tax for my self employment work, So that I will have proof that i have paid tax.

What are the steps I need to follow please?

Awaiting for your kind advise


Regards

 

[David Richards]

What are the steps I need to follow please.

Have you requested/completed/filed a self-assessment tax return? Do you have an accountant?

 

[elaine@cheapaccounting]

You need to register as self employed and complete a self assessment. Read here to get you started:

http://www.franklyaccounts.co.uk/gettingsole1.php

 

[robindunne]

During the same year 2009 to 2010, I have been working for self employed as well just for three months, and Have been paying 2nd class Ni.

If you only worked as self employed for three months you may have been exempt from paying Class 2 NI. If your profit from self employment is less than £5075 you do not have to pay it.

Also, half the battle with personal tax is keeping on top of the deadlines - see here:

http://rjdassociates.co.uk/deadlines/

 

[MyAccountantOnline]

Now as the year 2009-2010 has finished, I want to pay tax for my self employment work, So that I will have proof that i have paid tax.

What are the steps I need to follow please?

Awaiting for your kind advise


Regards

Our tax system is Self Assessment - in summary it means you have to complete your own tax return, and calculate and pay your own tax.

If you have registered as self employed with HM Revenue & Customs (which you should have already done) you should have been sent a tax return form, or a notice to complete one. You need to complete the tax return and calculate your tax liability. If you complete the tax return online it will be calculated for you, alternatively an accountant can sort it all out for you. Dont leave it too long various deadlines apply with penalties.

 

[email257525]

Thank you very much for you all who participated.
I have already paid NI for those three months (Self employed Periods), I was sent forms by HMRC to file my self assessment. But i am struggling to fill those forms out.

how would i need to work out?
1. Do i need to calculate my all gross earnings from five employed job and net profit from self employed? Add those up and get 20% of those will be my Tax. Which is suppoed to be paid
2. Do I just need to get the net profit figure from my self employed job and pay 20% tax on this. And do not bother about my employed jobs as I have already paid Tax on those through PAYE?

Please advise

Regards

 

[robindunne]

1. Pretty much. Gather the P45 from all your employments, each should have how much you have been paid and how much tax has been deducted from each.

2. No. You will need to fill out both the employment and self employment pages in the Self Assessment.

P.S. You should engage an accountant if you're not sure. The fees really aren't as much as you may think.

 

[elaine@cheapaccounting]

1. Do i need to calculate my all gross earnings from five employed job and net profit from self employed? Add those up and get 20% of those will be my Tax. Which is suppoed to be paid

all income or profit less personal allowance x 20% (assuming not higher rate payer) plus class 4 NI if due less tax paid

 

[MyAccountantOnline]

1. Do i need to calculate my all gross earnings from five employed job and net profit from self employed? Add those up and get 20% of those will be my Tax. Which is suppoed to be paid

You do add your taxable income which is your gross salaries and net tax adjusted profits (assuming you have no other income) to arrive at your total taxable income but it depends on how much it is as to what tax rate you pay at.

2. Do I just need to get the net profit figure from my self employed job and pay 20% tax on this. And do not bother about my employed jobs as I have already paid Tax on those through PAYE?

You have to work out your tax liability based on your total taxable income for the tax year you then deduct tax which you paid via PAYE/other sources (except for dividends where different rules apply) and the balance is payable or possibly repayable. Dont forget to add class 4 National Insurance.

 

[email257525]

Thank you for all your responses.

What I understand is, Add up all five employed taxable Gross earnings and net profit figure from self employed MINUS thresh hold figure and 20% of that figure is my tax which i suppose to pay. Then deduct this fugure from the tax I have already paid.

The last figure is coming up 1010 pounds, which I needs to pay. my total earnings are not above 30K so I am not supposed to pay higher tax rate.
Is the above calculations Okay?

I could not understand about Class 4 NI? I have already paid NI and tax on my employed earnings through paye, and paid 2nd class NI on my self employed.


Please advise

Regards

 

[MyAccountantOnline]

I could not understand about Class 4 NI? I have already paid NI and tax on my employed earnings through paye, and paid 2nd class NI on my self employed.

You're not alone - have a read here http://www.businesslink.gov.uk/bdot...ype=RESOURCES&itemId=1075390995&r.t=RESOURCES

 

[E Storey]

As an aside. If you move between employers a lot, I would strongly suggest you get all your P45s or final wage slips and check how much PAYE you paid.

I didn't think I needed to as historically I would get refunds automatically, but that does not appear to have happened for some years now.
When I checked I had overpaid by over £1,000.

You may find you are owed a considerable amount.

 

[elaine@cheapaccounting]

As an aside. If you move between employers a lot, I would strongly suggest you get all your P45s or final wage slips and check how much PAYE you paid.

I didn't think I needed to as historically I would get refunds automatically, but that does not appear to have happened for some years now.
When I checked I had overpaid by over £1,000.

You may find you are owed a considerable amount.

Wow you read my mind - topic of my latest blog post here:

PAYE Fiasco – it happens all the time!



http://www.cheapaccounting.co.uk/blog/?p=802

 

[E Storey]

Wow you read my mind - topic of my latest blog post here:

PAYE Fiasco – it happens all the time!

http://www.cheapaccounting.co.uk/blog/?p=802

I honestly can't believe that, with such a small taxable income last year I could have overpaid by so much.

As a bookkeeper I should have known better, but HMRC always (belatedly) sorted it out for me in the past. I assumed they'd looked when I registered as self employed this year, clearly not! Though they did tell me that in future I'd have to work it out myself!

If an accounts qualified person can let this happen how do mere mortals stand a chance!

 

[elaine@cheapaccounting]

Well you have the answer - 6 million wrong!

 

[email257525]

There are many classess of NIs
Class 1
2
3
4

Can any one please explain about these classess.

 

[MyAccountantOnline]

There are many classess of NIs
Class 1
2
3
4

Can any one please explain about these classess.

Here you go - copied and pasted from HMRC's website -
If you're employed

If you're employed you pay Class 1 National Insurance contributions. The rates are:

• if you earn more than £110 a week and up to £844 a week, you pay 11 per cent of the amount you earn between £110 and £844
• if you earn more than £844 a week, you also pay an extra 1 per cent of all your earnings over £844

You pay a lower rate if you're a member of your employer's contracted-out pension scheme.
Your contributions are deducted from your wages by your employer.
Read about tax and National Insurance if you're employed
National Insurance payments if you've contracted out of the State Second Pension
If you're self-employed

If you're self-employed you pay Class 2 and Class 4 National Insurance contributions. The rates are:

• Class 2 National Insurance contributions are paid at a flat rate of £2.40 a week
• Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits - 8 per cent on profits between £5,715 and £43,875, and a further 1 per cent on profits over that amount

If your profits are expected to be less than £5,075 you may not have to pay Class 2 National Insurance contributions.
You pay Class 2 National Insurance contributions either monthly by Direct Debit or by quarterly bill. You pay Class 4 National Insurance contributions when you pay your Income Tax.
Read about tax and National Insurance if you're self-employed
Voluntary National Insurance contributions

You can pay voluntary contributions (usually Class 3 National Insurance contributions) at a flat rate of £12.05 a week.
Class 3 voluntary contributions are paid either monthly by Direct Debit or by quarterly bill. But if you have gaps in your National Insurance contributions record you can make one-off payments of voluntary contributions to fill these.
Voluntary National Insurance contributions - find out more

 

[elaine@cheapaccounting]

As self employed you pay class 2 and 4 read here:

http://www.franklyaccounts.co.uk/gettingsole1.php

Class 4 is at a rate of 8% on profits over £5715

 

[email257525]

Extract from Above (If your profits are expected to be less than £5,075 you may not have to pay Class 2 National Insurance contributions.)

The above figure is annually, Right. In my case As i only worked 3 months as self employed and my net profit figure is less tha 5057. I have already paid NI. Am i eligible to get it back?


Regards

 

[elaine@cheapaccounting]

Extract from Above (If your profits are expected to be less than £5,075 you may not have to pay Class 2 National Insurance contributions.)

The above figure is annually, Right. In my case As i only worked 3 months as self employed and my net profit figure is less tha 5057. I have already paid NI. Am i eligible to get it back?


Regards

No you cannot get it back

 

[email257525]

Thank you for replying, This is very good help.

Can you also please clarifies?
Quotes ===Class 4 is at a rate of 8% on profits over £5715

Is this class 4 only payable to self employed income or When you calculate whole of your income at the end of the year and then pay on that whole figure (Employed and self employed)

Please explain
Regards

 

[wizzard]

No just on the self-employed income.