Setting up as Sole Trader whilst employed

[cheapskate design]

Greetings all,

Apologies if this has been covered in previous posts but I can't find anything that specifically helps me.

I currently work 30 hours a week and will be for the foreseeable future.

I'm also going to register as a Sole Trader to make a side-project nice and legit.

Am I correct in thinking that I simply continue to pay Tax & NI as I always have through PAYE and my employer, and assess my new business earnings completely separately?

Does the self-employed tax return form have a space to put income from my job (and therefore what I've already been taxed on), or are they almost two separate entities entirely?

Any advice appreciated!

Thanks

 

[.Spiralling.]

in your tax return you include details of earnings from your current employment, along with the tax etc that you've paid already, and also details of earnings from your self-employed work and pay tax owing on that. Your tax allowance will be used up by your 30 hour a week job, so you'll pay tax on everything you earn from your self-employed activites, at whichever rate is applicable (ie standard or higher).

 

[cheapskate design]

that's great, thanks for the advice. so all i need to do is register as self-employed and take it from there

 

[Dance teacher]

Your self assessment tax return will include an employment page and self-employment page. You can continue to pay your PAYE tax through your employer as normal, and as you say your business earnings are calculated separately. However the overall tax bill is calculated on all of your income.

It's straightforward enough if your main earnings are into the basic rate band, but the calculation pages you get with a tax return guide you through the various sections anyway.

With regard to national insurance, self-employed people pay both Class 2 and Class 4 contributions. But you can apply for small earnings exception for Class 2, and you only pay Class 4 when you reach a certain limit (£4825 for Class 2 small earnings exception and £5435 Class 4 lower earnings limit).

Give me a shout if you need any more help with this - it used to be my job before I left to join the real world lol.

Kate

 

[cheapskate design]

something called a "small earnings exception" sounds like it was designed with my level of business expertise in mind!

i'm going to register as self-employed online right now

thank you for the help, i suspect this forum might get quite a bit of harassment from me...

 

[NeophyteUK]

Does the Employer find or get told any details as a result of setting up as sole trader?

 

[cheapskate design]

not as far as i'm aware. you'd need to confirm with someone more knowledgeable but as far as i can tell, your income from your own affairs is completely separate from income from your job. you state how much you've earned from your job on your self-assessment return.

 

[Dance teacher]

Cheapskate you're right about the last comment in theory. There's generally no reason for your employer to know anything just from your tax code. However, if you choose to pay your tax bill via your code number during the following year (instead of paying it direct) your code would reduce and might spark some interest.

However, your employer doesn't see what's actually in your tax code so it could be reduced for any number of reasons - e.g. investment income, small pension, company car etc.

Hope this helps.

Kate x

(Neophyte I've replied to your PM - sorry been away for a few days).