This video was immensely helpful! Thank you so much for this; I was really confused as to whether to register as a limited company or sole trader, first of all and then what to do with my finances in terms of tax. I hadn't even considered National Insurance. I am now perfectly clear on all fronts - thank you!!
You need ur P60 PAYEE code when u do ur assement and ur earnings off ur p60 and the tax you paid write all that in your employment section you find all this infor to file ur employement income on ur P60 thats issued every april put any milage down if u get paid fuel back in allowable exepnses hope this help uk !
I think this is the best video I have seen so far. I cannot understand why accountants are not responding to me for help in doing my books. I am only just starting and want to get things right. The tax has not got back to me other than to say I already have a UTR number which I do not know about. But yeah I enjoyed the video
Hi John, sadly the tax office are super slow right now, partly time of year (just in insanely busy in the hmrc and tax world). Hope you managed to get it sorted! If you needed to talk about getting accountancy support you can always get in touch with my team.
to be honest this is the main reason why I am not starting any hustle side work as things are too complicated in particular that day job is automatically taxed, thanks for the great video
Please do start that business. Get some pro help if you need it, but yes although there are some rules and things to do, and some tax to pay, but please earn that extra money. Even with the extra tax is still more than you'd be earning not doing it! You never know where it could lead. We see people every day starting businesses from the bedroom that turn into a full time deal in no time.
i pay high tax doing both getting swing of doing them both if u dont feel brave get an accountant the 300 quid and only need them once a year and its classed as an expense paying for one dont shy a way from doing what u want because its uncomfrotable everything is at first
Thank you for these videos I have a question about payments on account when self employed and employed. Do payments on account apply to ONLY self employed income or both types? Thanks again
It’s odd in that they apply to your combined total tax bill. It’s usual however that your employed job is *generally* taxed correctly so in a combined tax bill you are normally paying just the tax on the other income.
Very helpful video, thanks a lot! My main worry is that my employer would not want me working on a side business whilst employed. Can they find out from the fact I’d be paying more tax? Or any other way, say I formed a company would they be alerted I was a director of a new company? Thanks again!
This actually inspired part of a video so thank you, but in short there shouldn't be any practical way from a tax point of view of them knowing that you've got a business. If you formed a LTD if they searched for you its possible they could see you on the public record. Again they wouldn't be alerted but if were actively searching could find you. There is no register for a sole trader like this however. The more practical point is, if you are going to be advertising your services, they may well come across you!
Hi Dan, really loving your simple and easy to understand "language". Apologies in advance for a basic question. Just recently opened a sole trader account to keep things "separate". However prior to it I used my other personal debit cards for business expenses. I have all receipts and backup if required. Can I still claim them on my 1st self assessment next year! :) Thanks again for a speedy response:)
Hi there, short answer is yes if they were for that trade/business then how you pay doesn't really matter. It's great you've got it more organised moving forward though!
Great advice thank you. Thinking of starting a handyman business. I earn 39k in my main job so how much would I pay in tax if I earned say 5K in my extra job? Thank you
I am not self employed, but I do want to know why many take away shops deal in cash? It seems to me that they pay £10 to hmrc and £20 to their pocket. Meaning they can afford luxury cars, big houses etc. I also want to know why self employed get away from,paying the correct amount of tax. For instance, they get allowance for using car for work, So do I, petrol or diesel to travel to and from businesses/ work, So do I, buying equipment for work, So do I because local governments only buy the cheapest PPE, at the same time putting our safety at risk. And so the list goes on. But being PAYE is an easy target to extract tax while self employed use accountants to dodge paying the due owed.
Hi Anthony, While the tax rates are slightly different for self employed, and some of the tax deduction rules, many cover the same type of expenses. If you are incurring equipment costs for your day job, it's actually often possible to get a tax deduction for example. While it would be rose tinted viewpoint to not think some takeways might not be underhand, most probably just dont want to pay card handling fees. Many of these services also hold your money for a little time, which can be a cashflow difficulties. The car rules for self employed are closely linked to that of an employee (when applied properly!). They basically say in many ways, if it looks like commuting, no tax relief; but if you are going to temporary workplaces, yes tax relief. This the same as employee. The self employed also don't get holiday pay, pension contributions however. There is also all the unpaid admin time to operate, insurances and other costs of business. I think it's a misconception most business owners are in the main rolling around with big houses and cars. Certainly statistically this is far from true. On accountants helping 'dodging' tax, there are some bad apples out there that put the professional to shame I am sure. For the most however they are here to help the owner pay what they should, and not more (or less). I actually think its a ridiculous state of affairs where as an owner you need to pay a professional just to understand what your actually tax bill is (right or wrong amount!). D
This was so helpful. I've recently started working a part time job while on furlough. My only question is, how does the 25% rule work? If i am paying 20% income tax and then 9% NI tax, isn't that 29% not 25%?
It is, and sometimes the 25% rule wont work. The reason it so often works even in this situation is due to when you have to pay the tax. Normally by time you've figured out what to pay and done your tax return you've worked a few months and put more aside. Also if you put the amount aside from total in, this is more than you need in most cases because you are putting 25% of your gross income aside, rather than a % of your profits. Hard to describe in text!
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If I got it right.. :) Basically total income self employed + employed comes under one bucket to be taxed (there is no separate allowance on self employed income?) However, with National insurance it's counted separately (one for employed and then different allowance under self-employed?)
I’ve just watched a HMRC webinar no better knowledge as a sole trader but this video has been a great help. It’s wanted to confirm they said a garden office built for part business usage (sole trader, complimentary therapist working 2 days a week)can not be offset against expenses. Is this correct?
Hi, I find these videos really helpful and really appreciate your tips and knowledge on all the different areas of business. I'm looking at starting up as a sole trader to begin with alongside my current job, I was wondering.... Should I register my business name to stop someone else using it? If so what's the best thing to do?
If your a sole trader, there isn't really a register with HMRC of business names. It's only LTD companies that have a formal register. If you wanted to create a trademark name you can defend, it's usually a case of registering a trademark (sadly not something us accountants get involved with). Oddly if someone else is called the thing you want to name your business, and has a trademark etc, they can still force you to change even a limited company registered with that name.
Because it would be unfair for you to receive untaxed income at a level vs another in a comparable situation. Tax people want their cut of it all :- ) Otherwise would be a very weird system; like how do you manage when you don't pay income on the self employed income? If I do a few hours a week and pay a tiny amount of tax, and then have £80k self employed income, should I pay no tax? :- ) Difficult, which is why the system gets so complex. The way it is now, all the income is going in one bucket and allowances being applied, throwing out a tax bill. Your tax in the job is just covering that income. Hope that helps - ) It's not better news I know....
I have been primarily self employed for 4 years now. Over the CoronaVirus Lockdowns and Pandemic my music teaching took a dive-bomb and I applied for the taxable SEISS grants. I forgot they were taxable and am now paying next years tax this year on a monthly basis. This has meant my 'income' appears far higher than it actually was. In normal times the amount I had earnt would not have been taxable and has now crossed a threshold and I am paying premium on a defected income. This situation has left me short and sitting at the lower point of my overdraft regularly, and the short of it is that I have taken part time employment to supplement my income. As I have not yet done my tax return for 21-22, I am not being taxed or having NI taken off my salary. How do I declare this in the next financial year on my tax form? Do I NEED to declare it, as it will eventually end up taxed by the company anyway? How do I work out my SE tax whilst also employed? I am expecting it to be SE income declared on top of that financial years income. I am cloudy on this issue and worried about it already even though I am a year away from needing to do anything about it. Is there anything I can do on this years Self Assessment to prepare myself for next year? I appreciate this is a very specific and large set of questions, so any guidance or general advice would be great!
Quite a lot here which I can’t answer in a comment without a lot more questions I’d need answering, but some highlights to help: Tax return needs all income in the tax year. There is a box to enter any tax paid from your employment on so it takes this into account when it gives you the tax bill If you are paying ‘payments on account’ get that 21-22 done because it might well turn out youve paid to much.
Amazing video! I'm thinking of starting my side hustle. Just wanted to ask, when I do my self assessment for 31st Jan, will HMRC already have all the information from my full time job and the tax/NI I've already paid, or do I need to dig up my pay slips for the tax year and input it?
It's an odd one. They will have it but you usually need to put the figure in anyway, or at min have your 'p60' or month 12 payslip to confirm the figure. You'd be surprised the amount of times HMRC figure is wrong vs the paperwork.
Great video. What confuses me a lot in their system is that for example, I already have a ft job and pay tax every month. When I had to fill my self-assessment from a side hustle, I had to add info/amounts related to the ft job as well, in order for the HMRC to get to a final total income. Then I could see how much I had to pay them back...it made me feel I paid twice in my ft job...very weird. Wonder if I've done something wrong.
That sounds normal. Even though they know your income/tax paid in job is a needs to be taken into account with other income to give you an overall tax bill. If you look at the ‘tax calculation’ you should see you are basically ‘charged’ the tax on your income, but then lower down the deduct the amount you’ve paid in your job.
@@HeelanAssociates Thanks for the reply. Something is definitely wrong then as I can only see under 'tax calculation' the total amount earned in both job as 'total income', minus personal allowance of 12.570 (standard) and the equal total on which tax is due...
NIce video; what would be really nice would be a walkthrough the tax form itself! So many confusing questions, for example "any other income?" - do I put my employment earnings here, or has my employer already paid that tax? tax codes???? what sort of accounting? does reading through my bank statement count as "cash basis"?
Hi Peter, Glad you enjoyed the vid. Yes the forms are complicated once it moves away from the simple stuff sadly! We don't really do walkthroughs on this because there are so many situations that require different entries, and we have to be careful with this sort of thing due to our professional body restrictions. All that said, it's also kinda what we sell 😀 We do find HMRC themselves are actually pretty good at telling you were to put things though if you ever are stuck and really want to do yourself, just can be wait times on the phones...
Can i register self-employed whit only 15-20 hours per week. And im working seasonal housekeeping in a caravan park (March to November)for a nother 8-10 hours contract.
If I have registered for self assessment and am nowhere near the threshold to pay tax, is it possible to unregister until I actually need to? The reason I originally registered no longer applies and I don’t need the extra stress while juggling the day job, side hustle and family life.
I’m books in and I started a self employed income too. I had zero earnings last year self employed and went into the high tax bracket in my full time employment. So I now owe child benefit back to HMRC. Can I offset that at all if I had no earnings in my sole trader status?
I work full-time and just started earning some income on the side online since April 19th. Luckily I exceeded the £1000 threshold by just May 13th so very early into the journey. I've never done taxes or anything in my life and this is a very overwhelming process :(
I will be setting up as self-employed soon. However, I would like to know more about what HMRC uses our taxes for? (I ask because I do not want to contribute towards war and human oppression). What can be done about this? Anyone?
Whilst we’ve not looked in detail, this seems a good start assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1003755/CCS207_CCS0621818186-001_PESA_ARA_2021_Web_Accessible.pdf
Thank you so much for this video, it’s very helpful. Can I just ask if you’re employed and then become a sole trader, can you put as expenses training you had before starting your own business? How about loans and student loans, can they be used as expenses? Many thanks.
Students loans no. Loans you *might* be able to deduct interest. Quite a few conditions on this. Training as a sole trader isn’t great. A lot of the time you won’t get a deduction. Prime example is something like a driving instructor. Wouldn’t be able to claim cost of initial training as a sole trader. If you think refresher courses and the like are often ok to deduct. Learning a skill normally not.
Hi this is super helpful. What happens if the calculation is ALOT more than you thought it would be. E.g I earn £24k in my teaching job and pay tax through paye. I then learnt £2275 in royalties from a tv programme I was in in the past. Bit the calculation of tac I owed was £1550!! It doesn't make any sense as I'm obviously only meant to pay 20% tax??
Hi Haley, First thing is to check if that £1550 has any 'payments on account' built in, which would be sorta 'tax up front' that may not be needed - its a very individual question. In pure tax terms that does seem to suggest something is quite correct in that calc.... but you may have multiple things in play here. Sorry not one we can answer in a comment here, too much knowledge of the situation and sight of the docs needed!
Quick Q on NI. I have a work pension of ~6k pa, and a self employed job that pays ~10.5k after expenses (ie profit). As the 6k from (as I see it) PAYE is below the NI threshold = I am not due to pay any NI. As the £10k Profit from S/Emp is below the £11,909 threshold = same again. Am I right?
Thank you for this video, it has been helpful. If I make a loss when I am self employed, how do I claim tax paid at my work place for the past four years.
Hi Dan, this video is super helpful, thank you for sharing tips like this one! However there is one thing, that I cannot really find an answer to: is if I have a full time job and I want to start my side hustle as a freelancer, is there anything that I need to say to my employer at my full time job? Is there anything that needs changing regarding my contract with them or everything stays the same as it is now and I only need to deal with HMRC? Thanks!
I've read and watched a ton of material in the last couple of months as I had to figure out whether I need to do self-assessment. You do not need to tell your full-time employer that you have started freelancing, that is none of their business. You only need to tell HMRC, and that is only if you earn more than 1000GBP as that is within your trading allowance. One thing I do recommend; keep your freelance work in a separate bank account, even if it's a personal (not a business) bank account, it will help you tons in the long run when you do eventually need to deal with self-assessment and other Tax.
Its often a case of what's in your contract. Some employers want to prevent it from happening, so its a T&C. In theory though, if you are self employed (no LTD), they won't actually know unless they came across your advertising! HMRC, even if they changed your tax code, don't tell employers what they are changing. If ltd, have a watch here: czcams.com/video/D6uU2_v73qI/video.html other than that, its pretty much down to you to tell them or not. Tax is all handled by you in a tax return really.
Really good information, thank you. Still confused with NI. If I earn £25000 in main employment (paying NI) and earn £1800 in self employment, am I expected to still pay NI on the £1800 as well? You mentioned NI1 on main employments and NI4 on self employments (NI2 is voluntary under £6500 so that's different). Is NI4 based on the total remuneration or only on the self employed £1800?
NI would still be payable if you go over the threshold in that job / income source. It's a weird thing in that its almost 'instanced' on each source of income. The class 4 would only be payable on self employed income if payable at all, not total income.
Thanks for great videos. Hi i have a public sector job and am also a limited company director with my wife as shareholder. I do not take any salary from the company so I do not have P60 or paye reference no. My question is when I am filling self assessment and I want to claim expenses like mileage etc how can I do that? Without filling the PAYE reference the form runs into error and I cant complete self assessment. Thanks in advance Ash
If you mean the mileage on behalf of your own limited company, you usually do this as a claim in your company records, rather than as an income tax claim (so wouldn’t put it in the personal self assessment).
Thanks so much for the video. I started my side business in September. I reached the £1000, threshold this month (December) and registered for a tax return. Is that return due in January next month (2023) or the January after the end of the financial year (2024)?
Super helpful video. Quick question...I'm looking to register as a sole trader but not take any income from the business. I want to re-invest all profits back into stock. How would tax work in this scenario?
My son was an employee all the time today he get a penalty for not returning self-assessment, how it is possible. Self-assessment is for self-employer not for employee!
Yeah tax return will have all your income on if they are asking for one. It’s in the return you can claim the £1000 trading allowance with a tick box. If your job tax is right there won’t be anything to pay there or self employment, so it’s just reporting.
Thanks for your informative video. I’m filling out my first self assessment which is a bit daunting! I am in full time employment but have a side job which I need to complete a self assessment for. When I’m filling out tailor your return, should I say yes or no to the question about being an employee? I am an employee in my full time job but not in my self employment. Any advice is much appreciated.
Yes you will be employed and self employed if you have both. So you fill out 2 sections of tax return, one for the employment income (asks about your job, income and tax paid etc) and one for self employment (where you put various dates, income, expenses etc.
I have a friend who is in a band and has been for some years, they perform two nights a week and he says he earns around £280 a weekend, he also works full time 45 hours a week earning around 22k a year, he is concerned he might be investigated by the Tax of office for his earnings. And he now wants to go legit with his earnings, what do you suggest he does and will he have to declare all his past earnings?
He can make a disclosure to HMRC for those earnings he hasn't declared. If they were made in years with the trading allowance available (www.heelanassociates.co.uk/self-employed-1000-trading-allowance-explained/) might not be as bad as he is thinking. Moving forward should fill in a tax return.
If you rent property and also resell as side hustles do you still only need to fill out one self assessment as a sole trader? I’ve filed for several years rental income but in the last 18 months also started a reselling side hustle with a view to ditching my full time job at Taco Bell (not really). Can I just add the additional income to the self assessment plus expenses wholly related to that side hustle? Or do I need to do anything extra? Side hustle is greater than 1k and pays slight better than Taco Bell.
Have a watch here SELF EMPLOYED - YOUR FIRST £1000 IS TAX FREE! czcams.com/video/J8j1GAZRAT0/video.html If you use this option it replaces you ‘real’ expenses.
Hiya, thank you for this video, it is very helpful and informative. I have a question… I have just become self employed along side being employed as i have just finished my education. I do not earn enough in my employment to be taxed right now, but also do not earn above that £1000 limit as self-employed to this date (altho ugh there is a lot of the tex year left). In this case is there anything I need to do to make the government aware of any tax situations? Any help would be much appreciated, thank you.
Sounds like a scenario where **right now** HMRC would say you don't need a tax return (you earn under the Trading Allowance {£1000}) / don't need to register yet. However there can be benefits to registering as self employed regardless (hard to give all the reasons in a comment) and certainly you should if you exceed the £1000.
so when i do a tax return for my self employed and paye job at the same time how do i do both on 1 tax return when i need to claim on both and have 2 different campanies names and paytoll numbers
There are different pages within the tax return. You can also have multiples of some pages, so if you had 3 jobs you’d have 3 sets of employment in pages in the return.
Hi ihave full time job which pay £30,000 and a side hustle which I earn £1,500 the online tax calculator is asking for over £6,000 which doesn't seem right. I don't understand how the extra £1,500 I have received means I have to pay a £6,000 ... in tax......more than I earn in profit
It sounds like it might be calculating total tax including job income. If this is your tax return make sure you've shown the tax you've paid in your job to offset.
Great video, really informative. I don't suppose you can offer advice re student loans from SFE. This is deducted from my current salary, what should I do about my little side hustle?
I am earning 48k per year for my job now. I am planning to start a new part time job which will earn me approx 7k to 8k per year. So i will be having appox 55k to 56k per year all together. So as I go above 50k I will have to pay 40% tax right? How can i register as a private limited company and save tax on my second job. I dont want to pay 40% however.. What are the ways?
Hey, that’s broadly correct yes the income over around £50k from your employment goes to 40% tax, until you reach about £125k. If you are employed, registering a limited company won’t help here. In all honestly there isn’t much that can be done about employment taxes other than things like maximising pensions, charitable donations etc.
Thank you for this video, I found it very helpful. My situation is slightly different however. I've been a sole trader for several years and one of my income sources has recently been taken over by a larger company and they have offered me a new contract, not as a self employed employee but salaried on PAYE. Where can I find information on presenting and paying tax on my reduced amount as a sole trader? Really hope you can help...Thanks
If I’ve read your situation right sounds like you need don’t to change the way you report - you’d just report less self employed income on your tax return, along with your paye income on different pages of the return.
Nice video with information I wanted to know. I would like to ask you, if I set up a business but I haven't set up a company yet and I start earning from this business, how long do I have to set up a company such as a sole trader or a limited company?
If you want the income to be that of the limited company, it needs to exist from day one. With a sole trader, you need to register when you earn over £1000 generally. By default, without the limited co, generally you’d be taxable as a sole trader from day 1. Check out the videos in here czcams.com/play/PLkzy-8ym2nIg5idhdqsyq9lTPOo6-U99T.html
If I’ve only earned £1000 in the first month and don’t work and I’m mostly selling old stuff I no longer want and just buying stuff I need with that money earned do I start paying tax past the £1000 ?
Hi just wondering can I work part time as employed and claim universal credit but also start business as self employed? (It will be a while till the business will grow). Will I loose universal credit once I set up my business? Thanks 😊
The short answer is yes, but keep your info up to date online with your claim, to make sure you get the right amount. You don’t auto loose uni credit, it’s earnings based.
This video was really useful! Just a quick question, if I have two businesses and I earn more than the trading allowance in business A and but less than the trading allowance in business B, do I still need to declare both businesses in my self assessment?
Love your videos they are really helping me so thank you so much for that. Can I ask you is there a way I can protect my business name as a sole trader?
Hi. So the trading allowance would it not be irrelevant if you’re working full time employed as you’re making money already? Be interested to know this, I started recently and would love to know :)
@@HeelanAssociates thank you, I’m working as a PAYE, recently set up Sole Trader as “side hustle” and now I can use this trading allowance to have £1000 first free :)
Thanks for this video! I have a question. I work full time and pay tax in my day job and I've just started a side hustle and got my 1st payment of over £1k this month (Dec 2023). Do I have register for tax immediately this year and pay this by January 2024 or do I have till next Oct 2024 to register and then pay it by the following Jan 2025? I've read conflicting info or this and am really confused now!
One more question :) I think I see the answer to this question already but for some reason can't find it now.. I'm a sole trader and dont want someone else to use my company name, can I register on Companies House as a sole trader to secure the name or is Companies House for LTD companies only? And would the only way to secure the name is to trademark ™️ the name instead.? Thanks
Hello, I stumbled across this video as I have just signed up to deliver for Uber eats part time, alongside my full time job, I earn around 1500 per month from my full time job, am I correct in thinking that I can do my Uber eats side hustle, and NOT declare anything unless I EARN £1000 or more per month? I'm really confused by it all even though you've explained it so well, sorry...
No probs Shaun, you’d pay tax over first £1000 in a tax year, not month. The reason the £1000 is possibly in play is because of the trading allowance: SELF EMPLOYED - YOUR FIRST £1000 IS TAX FREE! czcams.com/video/J8j1GAZRAT0/video.html
Great video Dan. I'm employed but starting as a sole trader on the side (but not registered yet). I'm wanting to import from China, but need an EOIR. Do you know if you can get an EOIR as a sole trader and without having a registered business and VAT registered etc???
You would need to be VAT registered to get the EOIR, and usually a UTR (tax ref) to get the VAT reg in the first place. So in short, would need to reg for self employment.
Thanks so much for the video! I’m both employed and now self employed. Do I need to create a second government gateway account or can I apply for self assessment using my personal tax account?
Great video, I have a bit of a complicated one. I became self employed 3 years ago (Etsy) and recently took on an additional 2 part time jobs. My salary is around 23k with all 3 incomes so how do I go about paying tax?
You need a tax return to report the Etsy income if over £1000. The part time jobs (presumed employed) go on different pages of the tax return but all goes into one return.
Great video, thank you. Lets say I earn over £50k, how would I go about finding out if a limited company was now the right way to go as corp tax is lower? Or is it still worth just starting and once profits hit £1000, then seeing what the right decision is?
Regarding income tax/NI let's say I earn £12,000 from self-employment that's about £3,000 saved for tax. To figure out what I owe regarding NI, do I then also have to save 9% of the remaining £9,000 (the balance after 25% saving)? Or does the 25% put aside incorporate tax AND national insurance
25% is just a rough guideline. In theory you calculate tax and NI separately as they have different limits. One fixed amount of NI (say ~£160 a year) One NI rate at 9% of profits above a threshold One or more tax rates, usually at 20% but could be 45% if you are 'lucky' You also might need to pay tax upfront on the tax return, so depending when you pay the 25% may help with that. Example for your 12,000, presuming you had a job where you earn say £25k a year and used your personal allowance there. £2400 tax (20%) £225 (Class 4 NI at 9% over £9500 a year) £158.60 (Class 2 NI, often referred to as 'stamp') =£2783.60 Your £3k would then cover it. But! You might have to pay some money up front towards the next year (know as 'on account'), so this extra and some of the months you are saving between earning it and having to pay the tax will usually help make up the extra difference. As I say, very rough guideline that stood the test of time :- ) Starts to go out the window at over £50k profit though....
Great videos 👍👍 I do gardening 7 months of the year on a Saturday (my day off) as well as a full time job £27k , I earn just under £1700 over the year , would I just pay tax on 20% on the £700 ?? Thanks 👍
Hi, Many thanks for informative video. Would you mind to answer one question please? I’m starting self employment along with my full time employment. Have spent £28k for self employment business to start. Does that means that I’m no longer will be paying tax from full time employment until the money spent for self employment business start up returned? I’m talking about pre-trade expenses? Thanks in advance
No you’d still be taxed in your employment if you normally pay tax there. However there could be a situation (lots of factors have to align to be the case) that you have a tax loss that could reduce your employed income from a tax point of view, that could result in a repayment. It’s so hard to say without full a lot more questions and data I’m afraid.
@@HeelanAssociates Hi, Thanks for reply. Your response actually made me absolutely confused and the information in your video post don’t actually match the reality. How can government refuse to return pre-trade expenses if the law clearly states that tax relief must be applied for allowable pre-trade expenses. Well ?????
Hi this video is really helpful. Thank you so much. I have just started a side hustle but when do I need to set up a tax account and send the tax report? I’m a bit confused on the April and Jan dates.
It’s worth doing once you get going. We see from your other comment you started in feb, so register soon ish to get your account up and running, and your tax return for 21/22
This is probably best explained here: www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed#toc-i-am-employed-and-self-employed-do-i-still-need-to-pay-class-2-nic-
As per my other question i am employed and self employed, but generally make less (on the side) than the £9881 Class 4 NICs limit, but do i always have to pay the Class 2 you state as £3.05/week if my profit is less than the £6515? The HMRC prompts me to do so voluntarily to protect my benefits (whatever those actually are), but its not clear whether I have to or not and more importantly what the consequences are.
It’s difficult to answer easily in a comment, but this will explain www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed#what-is-the-small-profits-threshold
This video was immensely helpful! Thank you so much for this; I was really confused as to whether to register as a limited company or sole trader, first of all and then what to do with my finances in terms of tax. I hadn't even considered National Insurance. I am now perfectly clear on all fronts - thank you!!
That’s great, glad it was helpful!
Topman, been on my mind for years and 2021-2022 may be the year for it 👍
Do it 👊
You need ur P60 PAYEE code when u do ur assement and ur earnings off ur p60 and the tax you paid write all that in your employment section you find all this infor to file ur employement income on ur P60 thats issued every april put any milage down if u get paid fuel back in allowable exepnses hope this help uk !
There is a new nuances to this, particularly around mileage (and expense claims in general).
Thank you for these videos! They are so helpful
Glad they are useful Evelin!
Fantastic video|! Thank you, super concise and I didn't even need to speed you up|!
Glad it was helpful!
I think this is the best video I have seen so far. I cannot understand why accountants are not responding to me for help in doing my books. I am only just starting and want to get things right. The tax has not got back to me other than to say I already have a UTR number which I do not know about. But yeah I enjoyed the video
Hi John, sadly the tax office are super slow right now, partly time of year (just in insanely busy in the hmrc and tax world).
Hope you managed to get it sorted! If you needed to talk about getting accountancy support you can always get in touch with my team.
Great video, Is there an updated version of this? Has anything changed since this was created in 2020?
We have down to do a new one just to freshen up, but concept is totally the same.
to be honest this is the main reason why I am not starting any hustle side work as things are too complicated in particular that day job is automatically taxed, thanks for the great video
Do not hold back. You will regret holding back in the future.
Please do start that business. Get some pro help if you need it, but yes although there are some rules and things to do, and some tax to pay, but please earn that extra money. Even with the extra tax is still more than you'd be earning not doing it!
You never know where it could lead. We see people every day starting businesses from the bedroom that turn into a full time deal in no time.
@@HeelanAssociates thanks a lot
i pay high tax doing both getting swing of doing them both if u dont feel brave get an accountant the 300 quid and only need them once a year and its classed as an expense paying for one dont shy a way from doing what u want because its uncomfrotable everything is at first
awesome. thanks for your help. your videos are what's given me the confidence to start my own side hustle.
That’s great to hear!
Great video. Exactly all the right detail I wanted, clearly explained.
Glad it helped!
Really helpful video - probably the best one so far ! Thanks
Glad you enjoyed!
Thank you. I worked out much of this on my own, but good to ensure I was/am on the right track
Glad it was useful!
Fantastic video thanks! Helped answer some questions I had regarding setting up a "side hustle" 🙂
Glad it helped Chris!
Really helpful, great video thank you. Subscribed and will check out more videos, all explained in a great way.
Thanks Simon glad you enjoyed.
Very helpful video! Thank you so much.
Glad it helped Carl!
Very clearly organized and presented introduction and video. Explained exactly the situation I have. Thanks.
Glad it helped Clive!
Thank you for these videos
I have a question about payments on account when self employed and employed.
Do payments on account apply to ONLY self employed income or both types? Thanks again
It’s odd in that they apply to your combined total tax bill. It’s usual however that your employed job is *generally* taxed correctly so in a combined tax bill you are normally paying just the tax on the other income.
Wow you are super helpful thanks so much!
Glad it helped!
Very helpful video, thanks a lot! My main worry is that my employer would not want me working on a side business whilst employed. Can they find out from the fact I’d be paying more tax? Or any other way, say I formed a company would they be alerted I was a director of a new company? Thanks again!
This actually inspired part of a video so thank you, but in short there shouldn't be any practical way from a tax point of view of them knowing that you've got a business. If you formed a LTD if they searched for you its possible they could see you on the public record.
Again they wouldn't be alerted but if were actively searching could find you. There is no register for a sole trader like this however.
The more practical point is, if you are going to be advertising your services, they may well come across you!
Thank you! So informative :)
Glad you found it useful!
Hi Dan, really loving your simple and easy to understand "language". Apologies in advance for a basic question. Just recently opened a sole trader account to keep things "separate". However prior to it I used my other personal debit cards for business expenses. I have all receipts and backup if required. Can I still claim them on my 1st self assessment next year! :)
Thanks again for a speedy response:)
Hi there, short answer is yes if they were for that trade/business then how you pay doesn't really matter. It's great you've got it more organised moving forward though!
Great advice thank you. Thinking of starting a handyman business. I earn 39k in my main job so how much would I pay in tax if I earned say 5K in my extra job? Thank you
Likely 20%, plus potentially 9% (ish) NI, depending on the year.
fabulous thank you so much. Simple and effective :)
Glad you found it useful!
I am not self employed, but I do want to know why many take away shops deal in cash? It seems to me that they pay £10 to hmrc and £20 to their pocket. Meaning they can afford luxury cars, big houses etc. I also want to know why self employed get away from,paying the correct amount of tax. For instance, they get allowance for using car for work, So do I, petrol or diesel to travel to and from businesses/ work, So do I, buying equipment for work, So do I because local governments only buy the cheapest PPE, at the same time putting our safety at risk. And so the list goes on. But being PAYE is an easy target to extract tax while self employed use accountants to dodge paying the due owed.
Hi Anthony,
While the tax rates are slightly different for self employed, and some of the tax deduction rules, many cover the same type of expenses.
If you are incurring equipment costs for your day job, it's actually often possible to get a tax deduction for example.
While it would be rose tinted viewpoint to not think some takeways might not be underhand, most probably just dont want to pay card handling fees. Many of these services also hold your money for a little time, which can be a cashflow difficulties.
The car rules for self employed are closely linked to that of an employee (when applied properly!). They basically say in many ways, if it looks like commuting, no tax relief; but if you are going to temporary workplaces, yes tax relief. This the same as employee.
The self employed also don't get holiday pay, pension contributions however. There is also all the unpaid admin time to operate, insurances and other costs of business. I think it's a misconception most business owners are in the main rolling around with big houses and cars. Certainly statistically this is far from true.
On accountants helping 'dodging' tax, there are some bad apples out there that put the professional to shame I am sure. For the most however they are here to help the owner pay what they should, and not more (or less). I actually think its a ridiculous state of affairs where as an owner you need to pay a professional just to understand what your actually tax bill is (right or wrong amount!).
D
Absolutely helpful Thank you
Glad it helped!
This was so helpful. I've recently started working a part time job while on furlough. My only question is, how does the 25% rule work? If i am paying 20% income tax and then 9% NI tax, isn't that 29% not 25%?
It is, and sometimes the 25% rule wont work. The reason it so often works even in this situation is due to when you have to pay the tax.
Normally by time you've figured out what to pay and done your tax return you've worked a few months and put more aside.
Also if you put the amount aside from total in, this is more than you need in most cases because you are putting 25% of your gross income aside, rather than a % of your profits.
Hard to describe in text!
Do this👆👆👆👆👆👆 if you happen to need a proper Forex trading mentor, he has a working trading strategy that is consistent and guaranteed to earn you $1900 daily, I see a lot of people are suffering financially....this bothers me that is why i do this to help the little i can.
Ok thanks got myself a receipt book
Great! Or 'Dext' as it's now called for some reason...
If I got it right.. :)
Basically total income self employed + employed comes under one bucket to be taxed (there is no separate allowance on self employed income?)
However, with National insurance it's counted separately (one for employed and then different allowance under self-employed?)
Pretty much!
This is so helpful thank you :)
Glad you enjoyed :)
Does this work if you provided Spanish language tutoring services?
I’ve just watched a HMRC webinar no better knowledge as a sole trader but this video has been a great help. It’s wanted to confirm they said a garden office built for part business usage (sole trader, complimentary therapist working 2 days a week)can not be offset against expenses. Is this correct?
For a quite a few reasons, yes that's right. Although the internal 'gubbins' / furniture might be claimable, either in full or part.
Hi,
I find these videos really helpful and really appreciate your tips and knowledge on all the different areas of business.
I'm looking at starting up as a sole trader to begin with alongside my current job, I was wondering.... Should I register my business name to stop someone else using it? If so what's the best thing to do?
If your a sole trader, there isn't really a register with HMRC of business names.
It's only LTD companies that have a formal register.
If you wanted to create a trademark name you can defend, it's usually a case of registering a trademark (sadly not something us accountants get involved with).
Oddly if someone else is called the thing you want to name your business, and has a trademark etc, they can still force you to change even a limited company registered with that name.
Really appreciate your response, thanks very much for your time and advice.
What's always confused me is why I have to pay tax on self employed income PLUS my regular employment income (taxed already through payslips) ?!
Because it would be unfair for you to receive untaxed income at a level vs another in a comparable situation. Tax people want their cut of it all :- )
Otherwise would be a very weird system; like how do you manage when you don't pay income on the self employed income?
If I do a few hours a week and pay a tiny amount of tax, and then have £80k self employed income, should I pay no tax? :- ) Difficult, which is why the system gets so complex.
The way it is now, all the income is going in one bucket and allowances being applied, throwing out a tax bill.
Your tax in the job is just covering that income.
Hope that helps - ) It's not better news I know....
Cheers! Great help
Glad it helped Adelene!
Hi Heelan, great videos but maybe if you can have illustrations on the video that would be great
Noted!
I have been primarily self employed for 4 years now. Over the CoronaVirus Lockdowns and Pandemic my music teaching took a dive-bomb and I applied for the taxable SEISS grants. I forgot they were taxable and am now paying next years tax this year on a monthly basis. This has meant my 'income' appears far higher than it actually was. In normal times the amount I had earnt would not have been taxable and has now crossed a threshold and I am paying premium on a defected income.
This situation has left me short and sitting at the lower point of my overdraft regularly, and the short of it is that I have taken part time employment to supplement my income. As I have not yet done my tax return for 21-22, I am not being taxed or having NI taken off my salary. How do I declare this in the next financial year on my tax form? Do I NEED to declare it, as it will eventually end up taxed by the company anyway? How do I work out my SE tax whilst also employed? I am expecting it to be SE income declared on top of that financial years income. I am cloudy on this issue and worried about it already even though I am a year away from needing to do anything about it.
Is there anything I can do on this years Self Assessment to prepare myself for next year?
I appreciate this is a very specific and large set of questions, so any guidance or general advice would be great!
Quite a lot here which I can’t answer in a comment without a lot more questions I’d need answering, but some highlights to help:
Tax return needs all income in the tax year. There is a box to enter any tax paid from your employment on so it takes this into account when it gives you the tax bill
If you are paying ‘payments on account’ get that 21-22 done because it might well turn out youve paid to much.
Amazing video! I'm thinking of starting my side hustle. Just wanted to ask, when I do my self assessment for 31st Jan, will HMRC already have all the information from my full time job and the tax/NI I've already paid, or do I need to dig up my pay slips for the tax year and input it?
It's an odd one. They will have it but you usually need to put the figure in anyway, or at min have your 'p60' or month 12 payslip to confirm the figure. You'd be surprised the amount of times HMRC figure is wrong vs the paperwork.
Great video. What confuses me a lot in their system is that for example, I already have a ft job and pay tax every month. When I had to fill my self-assessment from a side hustle, I had to add info/amounts related to the ft job as well, in order for the HMRC to get to a final total income. Then I could see how much I had to pay them back...it made me feel I paid twice in my ft job...very weird. Wonder if I've done something wrong.
That sounds normal. Even though they know your income/tax paid in job is a needs to be taken into account with other income to give you an overall tax bill.
If you look at the ‘tax calculation’ you should see you are basically ‘charged’ the tax on your income, but then lower down the deduct the amount you’ve paid in your job.
@@HeelanAssociates Thanks for the reply. Something is definitely wrong then as I can only see under 'tax calculation' the total amount earned in both job as 'total income', minus personal allowance of 12.570 (standard) and the equal total on which tax is due...
NIce video; what would be really nice would be a walkthrough the tax form itself! So many confusing questions, for example "any other income?" - do I put my employment earnings here, or has my employer already paid that tax? tax codes???? what sort of accounting? does reading through my bank statement count as "cash basis"?
Hi Peter,
Glad you enjoyed the vid.
Yes the forms are complicated once it moves away from the simple stuff sadly!
We don't really do walkthroughs on this because there are so many situations that require different entries, and we have to be careful with this sort of thing due to our professional body restrictions.
All that said, it's also kinda what we sell 😀
We do find HMRC themselves are actually pretty good at telling you were to put things though if you ever are stuck and really want to do yourself, just can be wait times on the phones...
Love this thank you !!
Glad you found it useful!
Can i register self-employed whit only 15-20 hours per week.
And im working seasonal housekeeping in a caravan park (March to November)for a nother 8-10 hours contract.
Yes number of hours isn’t a factor when registering.
Can you do a video on construction industry? on how subcontractors can save money on tax, and what reports they need to submit?
Sure, we can add it to the list. We did do this one, have you seen it? czcams.com/video/kGjnnKvudc0/video.html
@@HeelanAssociates I ve seen it now)), up to the point, thank you very much
Is a tax return required for a limited company director who is a full-time employee of another Company but has made no profit?
Tax return only needed if a) you have tax to declare, or b) hmrc have issued you one.
If I have registered for self assessment and am nowhere near the threshold to pay tax, is it possible to unregister until I actually need to? The reason I originally registered no longer applies and I don’t need the extra stress while juggling the day job, side hustle and family life.
Yes maybe possible - contact hmrc and explain circumstances/ income sources - they may consider you don’t need it and retract.
Thanks this very helpful
Glad it helped!
I’m books in and I started a self employed income too. I had zero earnings last year self employed and went into the high tax bracket in my full time employment. So I now owe child benefit back to HMRC. Can I offset that at all if I had no earnings in my sole trader status?
Sadly if your income is over £50k you start repaying child benefit regardless of earning no extra money.
@@HeelanAssociates yes I know that, but can I offset any of that by claiming back tax for certain things??
I work full-time and just started earning some income on the side online since April 19th. Luckily I exceeded the £1000 threshold by just May 13th so very early into the journey. I've never done taxes or anything in my life and this is a very overwhelming process :(
Congrats on the start! Can understanding it’s a little overwhelming for sure. At least it’s a good problem to have I guess?
I will be setting up as self-employed soon. However, I would like to know more about what HMRC uses our taxes for? (I ask because I do not want to contribute towards war and human oppression). What can be done about this? Anyone?
Whilst we’ve not looked in detail, this seems a good start assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1003755/CCS207_CCS0621818186-001_PESA_ARA_2021_Web_Accessible.pdf
Thank you! This was really helpful. Do you have any additional guidance about earning a sole trader income while on maternity leave please?
Hi Amy, sadly we don’t! I was trying to think of a resource to help but I can’t find one currently.
Thank you so much for this video, it’s very helpful. Can I just ask if you’re employed and then become a sole trader, can you put as expenses training you had before starting your own business? How about loans and student loans, can they be used as expenses? Many thanks.
Students loans no. Loans you *might* be able to deduct interest. Quite a few conditions on this.
Training as a sole trader isn’t great. A lot of the time you won’t get a deduction.
Prime example is something like a driving instructor. Wouldn’t be able to claim cost of initial training as a sole trader.
If you think refresher courses and the like are often ok to deduct. Learning a skill normally not.
Has much changed now in 2023 with regards to this video? Working a side project alongside full employment? Thanks
Very little! We considered doing a 2023 redo (and still might) but it’s very similar right now.
@@HeelanAssociates thanks
Hi this is super helpful. What happens if the calculation is ALOT more than you thought it would be. E.g I earn £24k in my teaching job and pay tax through paye. I then learnt £2275 in royalties from a tv programme I was in in the past. Bit the calculation of tac I owed was £1550!! It doesn't make any sense as I'm obviously only meant to pay 20% tax??
Hi Haley,
First thing is to check if that £1550 has any 'payments on account' built in, which would be sorta 'tax up front' that may not be needed - its a very individual question.
In pure tax terms that does seem to suggest something is quite correct in that calc.... but you may have multiple things in play here.
Sorry not one we can answer in a comment here, too much knowledge of the situation and sight of the docs needed!
Quick Q on NI. I have a work pension of ~6k pa, and a self employed job that pays ~10.5k after expenses (ie profit).
As the 6k from (as I see it) PAYE is below the NI threshold = I am not due to pay any NI.
As the £10k Profit from S/Emp is below the £11,909 threshold = same again.
Am I right?
Yes both jobs are considered separate for the calc so can end up with paying none or sometimes paying on both.
@@HeelanAssociates super. Thanks for the confirmation 👍
Thank you for this video, it has been helpful. If I make a loss when I am self employed, how do I claim tax paid at my work place for the past four years.
You can do it inside of your tax return, but some years may require a letter to HMRC.
Hi Dan, this video is super helpful, thank you for sharing tips like this one! However there is one thing, that I cannot really find an answer to: is if I have a full time job and I want to start my side hustle as a freelancer, is there anything that I need to say to my employer at my full time job? Is there anything that needs changing regarding my contract with them or everything stays the same as it is now and I only need to deal with HMRC? Thanks!
I've read and watched a ton of material in the last couple of months as I had to figure out whether I need to do self-assessment. You do not need to tell your full-time employer that you have started freelancing, that is none of their business. You only need to tell HMRC, and that is only if you earn more than 1000GBP as that is within your trading allowance. One thing I do recommend; keep your freelance work in a separate bank account, even if it's a personal (not a business) bank account, it will help you tons in the long run when you do eventually need to deal with self-assessment and other Tax.
Its often a case of what's in your contract. Some employers want to prevent it from happening, so its a T&C. In theory though, if you are self employed (no LTD), they won't actually know unless they came across your advertising!
HMRC, even if they changed your tax code, don't tell employers what they are changing.
If ltd, have a watch here: czcams.com/video/D6uU2_v73qI/video.html
other than that, its pretty much down to you to tell them or not. Tax is all handled by you in a tax return really.
Really good information, thank you. Still confused with NI. If I earn £25000 in main employment (paying NI) and earn £1800 in self employment, am I expected to still pay NI on the £1800 as well? You mentioned NI1 on main employments and NI4 on self employments (NI2 is voluntary under £6500 so that's different). Is NI4 based on the total remuneration or only on the self employed £1800?
NI would still be payable if you go over the threshold in that job / income source. It's a weird thing in that its almost 'instanced' on each source of income. The class 4 would only be payable on self employed income if payable at all, not total income.
Thanks for great videos.
Hi i have a public sector job and am also a limited company director with my wife as shareholder. I do not take any salary from the company so I do not have P60 or paye reference no. My question is when I am filling self assessment and I want to claim expenses like mileage etc how can I do that? Without filling the PAYE reference the form runs into error and I cant complete self assessment.
Thanks in advance
Ash
If you mean the mileage on behalf of your own limited company, you usually do this as a claim in your company records, rather than as an income tax claim (so wouldn’t put it in the personal self assessment).
Thanks so much for the video. I started my side business in September. I reached the £1000, threshold this month (December) and registered for a tax return. Is that return due in January next month (2023) or the January after the end of the financial year (2024)?
Likely Jan 2024 but have a read here www.heelanassociates.co.uk/when-do-i-need-to-do-a-tax-return/
Super helpful video. Quick question...I'm looking to register as a sole trader but not take any income from the business. I want to re-invest all profits back into stock. How would tax work in this scenario?
Have a watch of this one: czcams.com/video/meiBmOjQh0k/video.html
My son was an employee all the time today he get a penalty for not returning self-assessment, how it is possible. Self-assessment is for self-employer not for employee!
Give HMRC a ring, if there was no reason for it they will remove the need and most cases cancel penalty.
I'm starting to think I'm to thick to be self employed ,how much can a accountant do to help to keep numbers and notes where they should be
Services are super varied amongst accountants, so worth speaking to a few about your needs and see what sounds like a best fit.
question! i have a gov gateway account already, do i need to set up a new one as a solo trader for the purposes of tax?
Good question, depends on the taxes and set up. Good article here www.litrg.org.uk/tax-nic/how-tax-collected/online-tax-accounts
Fantastic video and very helpful! I do phoography on the side of my main PAYE job, at current its
Yeah tax return will have all your income on if they are asking for one.
It’s in the return you can claim the £1000 trading allowance with a tick box.
If your job tax is right there won’t be anything to pay there or self employment, so it’s just reporting.
Thanks for your informative video. I’m filling out my first self assessment which is a bit daunting! I am in full time employment but have a side job which I need to complete a self assessment for. When I’m filling out tailor your return, should I say yes or no to the question about being an employee? I am an employee in my full time job but not in my self employment. Any advice is much appreciated.
Yes you will be employed and self employed if you have both. So you fill out 2 sections of tax return, one for the employment income (asks about your job, income and tax paid etc) and one for self employment (where you put various dates, income, expenses etc.
I have a friend who is in a band and has been for some years, they perform two nights a week and he says he earns around £280 a weekend, he also works full time 45 hours a week earning around 22k a year, he is concerned he might be investigated by the Tax of office for his earnings. And he now wants to go legit with his earnings, what do you suggest he does and will he have to declare all his past earnings?
He can make a disclosure to HMRC for those earnings he hasn't declared. If they were made in years with the trading allowance available (www.heelanassociates.co.uk/self-employed-1000-trading-allowance-explained/) might not be as bad as he is thinking.
Moving forward should fill in a tax return.
If you rent property and also resell as side hustles do you still only need to fill out one self assessment as a sole trader? I’ve filed for several years rental income but in the last 18 months also started a reselling side hustle with a view to ditching my full time job at Taco Bell (not really). Can I just add the additional income to the self assessment plus expenses wholly related to that side hustle? Or do I need to do anything extra? Side hustle is greater than 1k and pays slight better than Taco Bell.
So say if you earn £3000 in your side hustle as a sole trader, are you taxed on £2000 or the whole £3000?
Have a watch here SELF EMPLOYED - YOUR FIRST £1000 IS TAX FREE!
czcams.com/video/J8j1GAZRAT0/video.html
If you use this option it replaces you ‘real’ expenses.
Hiya, thank you for this video, it is very helpful and informative. I have a question… I have just become self employed along side being employed as i have just finished my education. I do not earn enough in my employment to be taxed right now, but also do not earn above that £1000 limit as self-employed to this date (altho ugh there is a lot of the tex year left). In this case is there anything I need to do to make the government aware of any tax situations? Any help would be much appreciated, thank you.
Sounds like a scenario where **right now** HMRC would say you don't need a tax return (you earn under the Trading Allowance {£1000}) / don't need to register yet.
However there can be benefits to registering as self employed regardless (hard to give all the reasons in a comment) and certainly you should if you exceed the £1000.
so when i do a tax return for my self employed and paye job at the same time how do i do both on 1 tax return when i need to claim on both and have 2 different campanies names and paytoll numbers
There are different pages within the tax return.
You can also have multiples of some pages, so if you had 3 jobs you’d have 3 sets of employment in pages in the return.
@@HeelanAssociates thanks so much
Hi ihave full time job which pay £30,000 and a side hustle which I earn £1,500 the online tax calculator is asking for over £6,000 which doesn't seem right. I don't understand how the extra £1,500 I have received means I have to pay a £6,000 ... in tax......more than I earn in profit
It sounds like it might be calculating total tax including job income. If this is your tax return make sure you've shown the tax you've paid in your job to offset.
Great video, really informative. I don't suppose you can offer advice re student loans from SFE. This is deducted from my current salary, what should I do about my little side hustle?
When you declare profit on tax return, there is a box to click. If you owe more, the calculation will ask you for it :- )
I am earning 48k per year for my job now. I am planning to start a new part time job which will earn me approx 7k to 8k per year. So i will be having appox 55k to 56k per year all together. So as I go above 50k I will have to pay 40% tax right? How can i register as a private limited company and save tax on my second job. I dont want to pay 40% however.. What are the ways?
Hey, that’s broadly correct yes the income over around £50k from your employment goes to 40% tax, until you reach about £125k.
If you are employed, registering a limited company won’t help here. In all honestly there isn’t much that can be done about employment taxes other than things like maximising pensions, charitable donations etc.
Thank you 😊
You're welcome 😊
Thank you for this video, I found it very helpful. My situation is slightly different however. I've been a sole trader for several years and one of my income sources has recently been taken over by a larger company and they have offered me a new contract, not as a self employed employee but salaried on PAYE. Where can I find information on presenting and paying tax on my reduced amount as a sole trader? Really hope you can help...Thanks
If I’ve read your situation right sounds like you need don’t to change the way you report - you’d just report less self employed income on your tax return, along with your paye income on different pages of the return.
Can I ask, if you decide to be self employed on the side, will your main employer be made aware that you have another income? Thanks
In short no. With a ltd certain info is out in public, as self employed only tax people know.
@@HeelanAssociates thank you so much 😊
Nice video with information I wanted to know. I would like to ask you, if I set up a business but I haven't set up a company yet and I start earning from this business, how long do I have to set up a company such as a sole trader or a limited company?
If you want the income to be that of the limited company, it needs to exist from day one. With a sole trader, you need to register when you earn over £1000 generally. By default, without the limited co, generally you’d be taxable as a sole trader from day 1. Check out the videos in here czcams.com/play/PLkzy-8ym2nIg5idhdqsyq9lTPOo6-U99T.html
Hi Dan - thanks for the video - will there be another video on a 'Limited Company as a Side Hustle'
It’s on Dan’s list!
Also.... do you have any specific points you'd like covered on this?
If I’ve only earned £1000 in the first month and don’t work and I’m mostly selling old stuff I no longer want and just buying stuff I need with that money earned do I start paying tax past the £1000 ?
*probably* not. If you’ve no income outside this *most* uk taxpayers can earn around 12.5k without paying tax.
Hi just wondering can I work part time as employed and claim universal credit but also start business as self employed? (It will be a while till the business will grow). Will I loose universal credit once I set up my business? Thanks 😊
The short answer is yes, but keep your info up to date online with your claim, to make sure you get the right amount.
You don’t auto loose uni credit, it’s earnings based.
This video was really useful! Just a quick question, if I have two businesses and I earn more than the trading allowance in business A and but less than the trading allowance in business B, do I still need to declare both businesses in my self assessment?
Yes, and would need to review whether trading allowance would be beneficial, as it covers all of your self employed business.
Do you have any video for people who have a limited company as a side hustle?
Try this one BEING EMPLOYED AND HAVING A BUSINESS AT THE SAME TIME (LTD CO)
czcams.com/video/VATU3Q7p-7E/video.html
Thanks so much
You're welcome!
Love your videos they are really helping me so thank you so much for that. Can I ask you is there a way I can protect my business name as a sole trader?
You could apply for a trademark or similar www.gov.uk/browse/business/intellectual-property
Hi. So the trading allowance would it not be irrelevant if you’re working full time employed as you’re making money already?
Be interested to know this, I started recently and would love to know :)
Could still be using it SELF EMPLOYED - YOUR FIRST £1000 IS TAX FREE! (TRADING ALLOWANCE)
czcams.com/video/J8j1GAZRAT0/video.html
@@HeelanAssociates thank you, I’m working as a PAYE, recently set up Sole Trader as “side hustle” and now I can use this trading allowance to have £1000 first free :)
Thanks for this video!
I have a question. I work full time and pay tax in my day job and I've just started a side hustle and got my 1st payment of over £1k this month (Dec 2023).
Do I have register for tax immediately this year and pay this by January 2024 or do I have till next Oct 2024 to register and then pay it by the following Jan 2025? I've read conflicting info or this and am really confused now!
This may help! instagram.com/p/CkOmhbhh6vD/?igsh=bDY4cXNpZnh1b3Fj but no to worrying about it in Jan 24
@@HeelanAssociates Great thank you 😊
One more question :) I think I see the answer to this question already but for some reason can't find it now.. I'm a sole trader and dont want someone else to use my company name, can I register on Companies House as a sole trader to secure the name or is Companies House for LTD companies only? And would the only way to secure the name is to trademark ™️ the name instead.? Thanks
Sadly Companies House is for LTD companies only. For protection of name, it would be trademark protection to look into.
Hello, I stumbled across this video as I have just signed up to deliver for Uber eats part time, alongside my full time job, I earn around 1500 per month from my full time job, am I correct in thinking that I can do my Uber eats side hustle, and NOT declare anything unless I EARN £1000 or more per month? I'm really confused by it all even though you've explained it so well, sorry...
No probs Shaun, you’d pay tax over first £1000 in a tax year, not month. The reason the £1000 is possibly in play is because of the trading allowance: SELF EMPLOYED - YOUR FIRST £1000 IS TAX FREE!
czcams.com/video/J8j1GAZRAT0/video.html
Great video Dan. I'm employed but starting as a sole trader on the side (but not registered yet). I'm wanting to import from China, but need an EOIR. Do you know if you can get an EOIR as a sole trader and without having a registered business and VAT registered etc???
You would need to be VAT registered to get the EOIR, and usually a UTR (tax ref) to get the VAT reg in the first place. So in short, would need to reg for self employment.
Thanks so much for the video! I’m both employed and now self employed. Do I need to create a second government gateway account or can I apply for self assessment using my personal tax account?
Should be able to do via existing log in details.
Great video, I have a bit of a complicated one. I became self employed 3 years ago (Etsy) and recently took on an additional 2 part time jobs. My salary is around 23k with all 3 incomes so how do I go about paying tax?
You need a tax return to report the Etsy income if over £1000. The part time jobs (presumed employed) go on different pages of the tax return but all goes into one return.
Great video, thank you. Lets say I earn over £50k, how would I go about finding out if a limited company was now the right way to go as corp tax is lower? Or is it still worth just starting and once profits hit £1000, then seeing what the right decision is?
Have you seen this one?
SHOULD I BE A LIMITED COMPANY?
czcams.com/video/QBXEq931h98/video.html
@@HeelanAssociates thank you. I will take a look now. Thank you for replying in an old video, it means alot.
Regarding income tax/NI let's say I earn £12,000 from self-employment that's about £3,000 saved for tax. To figure out what I owe regarding NI, do I then also have to save 9% of the remaining £9,000 (the balance after 25% saving)? Or does the 25% put aside incorporate tax AND national insurance
25% is just a rough guideline.
In theory you calculate tax and NI separately as they have different limits.
One fixed amount of NI (say ~£160 a year)
One NI rate at 9% of profits above a threshold
One or more tax rates, usually at 20% but could be 45% if you are 'lucky'
You also might need to pay tax upfront on the tax return, so depending when you pay the 25% may help with that.
Example for your 12,000, presuming you had a job where you earn say £25k a year and used your personal allowance there.
£2400 tax (20%)
£225 (Class 4 NI at 9% over £9500 a year)
£158.60 (Class 2 NI, often referred to as 'stamp')
=£2783.60
Your £3k would then cover it. But! You might have to pay some money up front towards the next year (know as 'on account'), so this extra and some of the months you are saving between earning it and having to pay the tax will usually help make up the extra difference.
As I say, very rough guideline that stood the test of time :- ) Starts to go out the window at over £50k profit though....
thanks
No problem, hopefully it helped!
Great videos 👍👍 I do gardening 7 months of the year on a Saturday (my day off) as well as a full time job £27k , I earn just under £1700 over the year , would I just pay tax on 20% on the £700 ?? Thanks 👍
Likely 20% and 9% National Insurance. (So slightly cheaper than your job at 20%/12%).
Hi,
Many thanks for informative video.
Would you mind to answer one question please?
I’m starting self employment along with my full time employment.
Have spent £28k for self employment business to start.
Does that means that I’m no longer will be paying tax from full time employment until the money spent for self employment business start up returned?
I’m talking about pre-trade expenses?
Thanks in advance
No you’d still be taxed in your employment if you normally pay tax there. However there could be a situation (lots of factors have to align to be the case) that you have a tax loss that could reduce your employed income from a tax point of view, that could result in a repayment.
It’s so hard to say without full a lot more questions and data I’m afraid.
@@HeelanAssociates Hi,
Thanks for reply.
Your response actually made me absolutely confused and the information in your video post don’t actually match the reality.
How can government refuse to return pre-trade expenses if the law clearly states that tax relief must be applied for allowable pre-trade expenses.
Well ?????
Hi,if you already have a job employed do u still get the 1000 pound allowance
Yup it's purely for use with your sole trade, being employed will not impact it.
Is this after expenses when you give example of only earning 9k in one year?
Do you have a time stamp for the bit you are referring to?
Hi this video is really helpful. Thank you so much. I have just started a side hustle but when do I need to set up a tax account and send the tax report? I’m a bit confused on the April and Jan dates.
It’s worth doing once you get going. We see from your other comment you started in feb, so register soon ish to get your account up and running, and your tax return for 21/22
Thanks for the video! I'm employed and self-employed. Do I have to pay voluntary class 2 NICs if I'm already paying for NICs through my employment?
This is probably best explained here: www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed#toc-i-am-employed-and-self-employed-do-i-still-need-to-pay-class-2-nic-
As per my other question i am employed and self employed, but generally make less (on the side) than the £9881 Class 4 NICs limit, but do i always have to pay the Class 2 you state as £3.05/week if my profit is less than the £6515? The HMRC prompts me to do so voluntarily to protect my benefits (whatever those actually are), but its not clear whether I have to or not and more importantly what the consequences are.
It’s difficult to answer easily in a comment, but this will explain www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed#what-is-the-small-profits-threshold