Tax question?

[splinterdream]

Hi all.

All this year I was building up to starting on my own after 19 years of working for others however with the downturn i bottled it.

After spending a few thousand on equipment and registration though and having work from an estate agent i decided to trade after work for a couple of hours a day in the hope that in a year or two that my reputation will keep the phone going enough to give me the confidence to go full time.

My question is whether anyone has done this and knows how the tax works. I am keeping reciepts, invoices, have a business account however not sure how much tax I'll pay if any at all. Does my wage count as profit? will my employer have to know whether I'm trading? What counts as a reciept (what needs to be on it)? If anyone can help would be much appreciated

 

[julesverne]

you don't have to let your employer know unless its your employment contract. A Receipt is anything considered an expence to you. ie tools, materials, car park ticket when you go to bank to pay money into your bank account(business related). also you have to notify inland revenue within 3 months of becoming self employed or you will be fined. when you do your tax return. your income from your day job will not count as profit as such. but you will be paying tax on all profit from self employed work as you will have used up your tax allowance on your day job as well as far i'm aware you will still need to pay your Ni contributions on the money earn self employed. also any money you spend on setting up your business will be classsed as expenses.

 

[tamz]

You would be better speaking to an accountant. You will probably need one anyway (another expense).

You will need to register with HMRC as you will pay tax on anything you make. As you are getting the work through an estate agent (another business) there is no way to hide or avoid registering as they will find out eventually anyway through cross referencing.

If you are paye your wages are just your wages. Tax and insurance is deducted at source so you don't need to worry about that and your employer needn't find out you are working for yourself either.
Your day job will use up your tax allowance though so all other profit you make will be taxed at 20% or more.
Keep receipts for anything you buy and fuel you use in connection with your own work to offset against your profit.
Remember to get yourself insurance just in case.
As said it would be best to talk to an accountant who will keep you right and should save you more than he costs.

 

[markinaark]

keep this in mind, losses from one source can often be set off against profits in another,
ie losses incured from your self employment income, can be deducted against your taxed income( without employer knowing) from full time employment income. and if you have kids consider using their tax free allowances. having them working for ( or assisting you) very little prsi is charged if a family member.

 

[splinterdream]

Thanks to all. I dont have a contract with my employer and do everything after work legit using my own vehicle, equipment etc. Just need to keep the agent i work for sweet for a year or so and get a bit of a list of my own regulars so i know when i take the step the risks are minimal. It seems flooded with plumbers/gas engineers around here (forgive the pun).
Great idea about the kids but I'm not sure I'd get away with declaring my 10 month old daughter as my PA. Anyway for this year i think i may look at the services of an accountant.
Thanks again and hope your busy

 

[markinaark]

to be honest do a basic bookeping course in your local night courses, keep it basic and you wont need an accountant, as they really dont have as much interst in the running of your business as you do.and that way you will always know exactly where you stand. you can always get advice or ring revenue if your not sure about the finer aspects, may seem a bit daunting at the start, but have a bit of faith in your abilities..