Tax on self-employment income while remaining employed

“I have a full-time job, but I have started doing some freelance work in my spare time. What do I need to do about my taxes, how much tax will I have to pay, and when?”

Whether to register the new business with HMRC

First of all, whether starting self-employment as a sole trader or a partnership, you should probably register with the tax office as a new business. This is a legal requirement if there is tax or National Insurance to pay as a result of your side business, which is highly likely if your combined income from employment and self-employment is over the tax-free Personal Allowance of £7,475 and there are no other complicating factors. It makes no difference if you are already paying tax on your employment income through PAYE. Tax is always calculated on total income, and there are no allowances or registration exemptions specific to self-employment. For example, if your employment earnings are over £7,475, and your business income is only £500, in most cases there will be tax to pay on that income and so you must register.

It is currently HMRC policy that all new businesses should register with them, regardless of size and even if there will be no tax to pay. Note however that this is only their preference, and goes beyond their legal powers.

Registering is very straightforward, and can be done online on this page of the HMRC website. You only register as a self-employed person once, regardless of how many different businesses you have.

What happens after you are registered?

Once registered, you will be allocated a Unique Taxpayer Reference (UTR) number, unless you already have one.

Self assessment Registering as self-employed in this way does not mean that the tax office will tell your employer about your sideline business, as your own tax affairs are confidential. It is also unlikely that your PAYE tax code will need to change, for the first year or 2 at least. See: Will my employer find out about my business?

Self-employed people usually have to pay Class 2 National Insurance contributions at a rate of £2.50 per week (in practice they are paid monthly). However, if expect your self-employed income to be less than £5,315 per year, you will can apply for an exemption. See more about Class 2 National Insurance.

As someone with self-employment income, you will be sent a self-assessment tax return in April every year, on which to report your total income (both employed and self-employed) for the tax year that has just finished. You will need to keep records of your business income and expenses so that the tax return can be completed. You can choose to prepare your business accounts to any date each year, rather than having to use the anniversary of when the business started. 31 March or 5 April are the simplest options for tax purposes, so most people opt for either of those.

How much will the tax be?

In working out the tax, you generally pay tax on your employment income through PAYE on your payslip each week or month, and tax on your business income based on the amount of profit (not turnover) that gets entered on your tax return each year.

Your tax-free Personal Allowance usually gets allocated to your employment, so the tax on your self-employment will be at your own highest tax rate. If your total income is below £42,475, the tax on your self-employed income will be 20%, but any income over £42,475 will be taxed at the higher rate of 40% (income above £150,000 may be taxed at 50%).

Additionally, you pay Class 4 National Insurance on your self-employed earnings at a rate of 9% on any income between £7,225 and £42,475 in a year, and at 2% on any income over £42,475. If your combined income goes over £40,000 in the tax year, the amount of Class 4 NI payable starts to be restricted (more details).

It is useful to know what percentage of self-employed earnings should be set aside for tax, but as seen, this is not possible. The amount could vary from 20% to 59% (possible, but rare). For someone with average earnings, we recommend setting aside around 25%, and then completing the tax return shortly after 5 April each year so that you get several months’ notice of what the final liability will be.

When will the tax have to be paid?

The total tax and Class 4 National Insurance on your self-employed income (together with any other minor tax adjustments that get sorted out on the annual tax return) is usually payable by 31 January after the end of the tax year. So, if you started your business in October 2011, this falls in the tax year to 5 April 2012, and the tax on the business income up to 5 April 2012 will be payable by 31 January 2013.

If the tax and NI payable from your tax return is over £1,000 per year, and this total is more than 20% of your total tax paid for the year, then you may have to start making advance payments on account of tax every 6 months.

Alternatively, provided your tax return is submitted online by 30 December, and your combined liability for 31 January is less than £3,000, you can pay the tax by having it deducted from your salary via PAYE throughout the following tax year. This will result in your tax code changing, which will signal to your employer that you probably have another source of income. If you do not want the tax to be collected this way, tick box 2 on page 5 of the tax return before filing it.

Once the tax return is submitted, you will receive statements in the post confirming the amount of tax payable and explaining how it can be paid.

Simple example for first year of business

Annual salary = £20,000. Assume a standard tax code of 747L, with no complications.
The business starts in September 2011.
Profit from self-employment in year to 5 April 2012 = £10,000.
Tax on self-employed income at 20% = £2,000.
Class 4 National Insurance on self-employed income at 9% on earnings over £7,225 = £249.75.
Combined amount payable by 31 January 2013 = £2,249.75.
As this is more than £1,000, and it is more than 20% of the total tax paid for the year, a payment of £1,124.87 (50% of the January payment) will also be required in January 2013 and July 2013. These payments can be deducted from any tax due in January 2014.
Alternatively, the £2,249.75 liability can be paid through PAYE evenly throughout the 2013/14 tax year.

88 Comments (oldest first)

1. Angela Dickson says:

Hi

I have been doing photography as a hobby for a number of years but now have an opportunity to do paid work. I want to make sure I do everything by the book and have been reading up on the options but don’t know where to start.
I don’t work but my husband works part time entitling us
to get child tax and working families tax credit.
I have an online website showing various shoots i have did as a form of a portfolio and registered as name of the website.co.uk can the inland revenue fine me for displaying a website which is not registered for trading.
Doubt i will make much money to start with but where does it leave me as a person starting work and my benefits
5 March 2009
2. admin says:

You can be fined if you have been making money from your website or photography without registering or paying tax, but not if you have not been making a profit.

There is likely to be an effect on your benefits and tax credits, but it will depend on how much money you make from the work.
5 March 2009
3. Ed Brookes says:

I have been registered as self-employed for the last couple of years to account for some limited work I undertake on behalf of customers. In the first (part) financial year I earned around £700 and the following year this figure rose to around £2000.

I have now started a part-time (2days a week) temp job with earnings of just under £5100. I was told by the Inland Revenue prior to commencing work that I would be put on a tax code of 647L and any earnings from my self-employed work would then be taxed following completion of my tax-return. Instead I have been put on a BR tax code (despite my self-employed work not using up my tax allowance) and have been told I must claim the tax back on my tax return. I cannot believe that this is the case as I am now being taxed at 20% on a low income.

Could you advise whether I should be able to change my tax code and if so how I go about doing so?
4 October 2009
4. admin says:

If you phone your tax office and ask them to change your PAYE tax code, they should do so.
6 October 2009
5. Julie M says:

I was employed until June, then in August started working as self employed. I registered with HMRC as self employed. When is my first tax payment due? Do I need to make a payment before the end of the tax year for either tax of NI?
25 January 2010
6. admin says:

Assuming that you have no other income that would result in you having to pay tax, and you are talking about 2009, your first tax payment is due in January 2011.
25 January 2010
7. sarah says:

hi my children go to nursery which we get help for from the government. my husband is in fulltime work and me in part time work. i’m going to go self employed with my own little business and give up my job . i will only earn the same. will we still get help for the nursery if i go self employed and our money stays roughly the same.
thanks
sara
7 February 2010
8. admin says:

This site is not really about state benefits, so you will have to check the eligibility criteria for the particular benefit you are claiming, but if your total income is unchanged, everything else is likely to stay the same.
7 February 2010
9. Sharon says:

I am employed and wish to start an online business in my spare time. So am I right in saying that if I regeister as self employed my employer will not be told? Will they not find out via how much tax I will pay?
16 September 2010
10. admin says:

Ordinarily your employer would not be given any information about your self-employment.
16 September 2010
11. Simon says:

I am employed full-time but in April started a self employed job on the side. I am on PAYE for my main job which earns about £15000 a year and was wondering about my tax and NI for my side job, which earns about £2k-£3k a year…I fall under the National Insurance threshold for self employed but is this negated by my full time employment? And, I am presuming I have to pay tax on the side job despite it being such a small amount? Thanks for your help
9 November 2010
12. admin says:

The lower earnings threshold for National Insurance is not affected by the employment income.

You would have to pay tax on your self-employed income regardless of how low the earnings were.
9 November 2010
13. Simon says:

Thanks very much for your help….everything has been getting a little confusing!
10 November 2010
14. Wayne says:

A friend and I are at the early stages of setting up a company which will for the foreseeable future will be a sideline. I am currently employed with PAYE. Our sideline company was recently setup as a LTD company. What I would like to know is how I handle the tax implications of employed PAYE together with paying tax on the sideline. So far, I have worked out that I shouldn’t register as self-employed for the sideline company, but what should I do?

Any pointers would be much appreciated on this combination of PAYE and directorship.
2 March 2011
15. admin says:

Matters are more complicated when there is a limited company involved. You need full professional advice.
2 March 2011
16. James says:

Am I right in understanding that even though I am employed full time and my employer pays my NI, I still have to pay an additional NI as a ’self-employed’? If so, why is this?
8 March 2011
17. admin says:

Broadly, yes, subject to the small earnings exemption, and an upper limit each year which is too complicated to explain here.

‘Why is this?’ Why not? It is all your earnings.
8 March 2011
18. Richard says:

Hi,

I have a full time job at basic rate tax. I have just completed my first piece of freelance work, and may get another bit soon. However, over the next year it would be less than £1000 that I would make from this.

What do I need to do in order to pay tax on this small amount of extra income?

Also, I will be emigrating to the US within a year. How would this affect things?
29 April 2011
19. admin says:

You need to complete a CWF1 form to register as self-employed, and then complete and return the tax return when they send it to you.

Moving overseas introduces complications that are beyond the scope of this page.
30 April 2011
20. Maria says:

I currently work part time and tax, NI paid. In the last 2 years I have done handbag parties in the evening to earn a little extra money. I have registered as self employed and paid my extra NI contributions and completed my tax return and paid my additional tax.
My question is I now want to do my floristry from home (but still remain in paid work) by rather than trade under my name I would like to trade under a business name, but it will just be me as a sole trader. Do I register the name with company house? Do I have to do anything further with HMRC or I am ok as I am already self employed and paying my extra contributions?
8 May 2011
21. admin says:

As a sole trader, you do not need to register a business name with Companies House, or anyone else.

You also do not need to register your 2nd self employment separately with HMRC. It is sufficient just to include it on your next tax return.
9 May 2011
22. KM says:

Hi, Can I just have some advise on my case, I am currently working full time @ £25000 annual salary. Tax/NI are paid as normal on the company payroll. I am now going to register a Limited company (hopefully in September 2011) and start an online electronic store. I wonder, as I will keep my full time job as well as own business,
what will involve
when Tax/NI are due and
what rate

Thanks very much.
23 August 2011
23. admin says:

Having a limited company is not the same as being self-employed for tax purposes, so the information on this page does not apply.

With a limited company, you will probably receive a combination of salary and dividends. The situation is a lot more complicated, and you should get professional advice specific to your circumstances.
23 August 2011
24. Sebastian says:

Hi,
I’ve found on http://www.hmrc.gov.uk/incometax/basics.htm that if your total income is below £35000, the tax on your self-employed income will be 20% as basic rate tax. From your information, provided on this page, if the income is below £41,435 it will be taxed with 20%. Can you tell me which one is correct, as I’m close to £40,000 income!
Thank you very much.
28 August 2011
25. admin says:

The figure on the HMRC website does not include the Personal Allowance.
29 August 2011
26. Sarah says:

Hi

Im considering setting up a small business. This will only be part time and run from my home. I work full time at the moment and will continue to do so. I don’t expect to make much profit but i want to make sure i do everything properly.

Am i right in saying that my employer will still continue to pay my tax contribution through PAYE in relation to that employment and i will then pay anything extra in relation to my business through completeing the self assessment form

Thanks alot
9 October 2011
27. admin says:

That is basically correct, yes.
11 October 2011
28. Mark Lawton says:

I have started self employment whilst employed. I will be earning £4000 a year self employed, so I am exempt from NI etc. I have filed out the forms, and been accepted for this exemption.

I started in March 2011, registered self employed while still employed on PAYE elsewhere.

I don’t understand though in my PAYE employment; my tax code has suddenly changed from 547L to 747L.

When I got my payslip I had about £13.00 less per week in my pay from PAYE employment.

As I will self-assess the self employment, what is going on with my PAYE job?

I thought it shouldn’t affect it, as I am self assessing the self employment seperately.

What has happened there, and it is right, as my colleagues are all on 547L? People on more money are still on this code too.

What has happened there then? Do I need to query it?
17 October 2011
29. admin says:

Was it April when your tax code changed? They usually change every April for everyone.

If your tax code goes up, your tax deduction should go down, but it does depend on the exact circumstances and the year-to-date figures.

Have you received any PAYE coding notices?

747L is the standard tax code for most people. If you do not think it is right, query it.
17 October 2011
30. Mark Lawton says:

Thanks for the reply,

No it wasn’t in April that it the tax code changed, it was only last week in the beginning week of October 2011.

I tried querying it, but the call went around in a circle and I ended up back to the main menu. I will have to ignore some of the menu items next time maybe to bypass the automated message and get straight onto an operator instead of being pushed back to looking online. Tha answer wasn’t there on the HMRC website or I couldn’t find it.

Another time I was holding on the phone with music for 15 minutes with no reply!

What is the best time to ring them between the “8 to 8″ time-slot I wonder?

Maybe I should go there and visit, or do you have to take a ticket and wait in long queues? I think I remember waiting 4 hours to be seen to in the early 80’s!

Mark
17 October 2011
31. Mark Lawton says:

P.S.

I did get a letter from the HMRC mentioning the change of tax code the week before at the beginning of October 2011, but at the time I thought nothing of it. I still have the letter though.

Then the next pay slip was different after this, £13 a week worse off!

I dont get why it has changed though; or are they second guessing my income for self-employment at the same time until I do the online assessment?

Mark
17 October 2011
32. admin says:

The letter will explain what has happened and why.
17 October 2011
33. Mark Lawton says:

I had a read of the letter, and I am none the wiser to be honest.

Looks like It won’t hurt to ring them up.

I wished I could email them. I wonder if anyone knows a “back door” email address so I can get my question through clearly, and then get a proper worded answer, as verbal on the phone can be a bit vague sometimes.

I tried a few more time but haven’t been successful in getting through on the phone so far. They must be quite bofgged down with queries then.

Thanks for the chat about this so far anyway.

Mark
18 October 2011
34. Mike Galley says:

hi there, just after a little informetion. i currently work for a company, earning £18,000 a year, i will be starting a business on the side, initially just at weekends till it picks up, i have bought the domain name i want for the business so i can set up a website and email address etc for my business, do i have to register with companies house? it will just be me working at the business as self employed. i cant predict what i will earn from this new business yet, i understand i will have to pay my own NI contributions and tax , and that the tax free allowance wil only apply to my PAYE job, so really all my earnings for my new business will be subject to tax, is this right?
24 October 2011
35. admin says:

Only limited companies and Limited Liability Partnerships need to register at Companies House.

Your understanding of the tax is basically right.
24 October 2011
36. Mike Galley says:

many thanks for this, so i would just register as self employed with the tax office and trade under my company name and set up website etc.

kindest regards
24 October 2011
37. Nilesh says:

Hi, I was in perm job until 23 Jan 2011. I started working through my limited company on 24/1/2011. I did not pay myself any salary for the period 24/1/2011 to 5/4/2011 but drew dividend of 2000 pounds. How do I put this on my tax return. Just mentioning self employed results in me having to enter turnover figure which then causes the tax to go very high though the money is in company account and not my personal. Any help appreciated. - Thanks,
30 December 2011
38. admin says:

If you are working through a limited company receiving dividends, you are not self-employed for tax purposes. Your company income and expenses get included on a completely separate corporation tax return. Dividends go in box 3 of page TR3 of the personal tax return.
30 December 2011
39. william says:

Hi - I earn 48k and pay 40% tax and NI in paid employment through PAYE. I’m going to register as self employed stating start date as 1st May 2011, I have made income of £450 to date and spent £5k on asset/expenses. I continue to spend more on assets / expenses and anticipate reaching 10k on this but hope to make a good return on my investment in year 2, I don’t expect income to generate more than 1k tops by April 1st 2012. My understanding is I need to register as self employed before 31st January 2012? I also need to apply for NI exemption as I pay so much through my current employment. I, under the impression I didn’t need to register in first 3 months and there is no penalty for this in my circumstances.I’d be very greatful for your advice.
I believe I am eligible for a tax rebate? Would this be for the amount of money I spent on expenses/assets? Can I get this back in April 2012 ? Many thanks
7 January 2012
40. admin says:

William,

The latest you can register is 31 January 2013, but HMRC prefer that you register promptly, and there is really no good reason to delay.

You can apply for NI exemption using form CA72B.

You can offset your self-employed losses against your employment income to generate a tax refund, but based on £10K of expenditure before 5 April 2012 this will be in the region of £3K and obviously not the full £10K. The earliest you can apply for this is in April 2012 if you register for self assessment before then and then file your tax return in that month.
8 January 2012
41. william says:

thank you. very helpful.
I assume if expenses is 5k then I can claim 1.5k back.
Is there a site of what is classified as expenses?
8 January 2012
42. admin says:

It will be more like £2K, as then all of the relief would be at the higher 40% tax rate.

There is no simple yet comprehensive list of allowable and disallowed expenses anywhere. It is too complicated for that.
9 January 2012
43. Matthew says:

Hi - Ive been reading through for some advice, and although everything i’ve read is very helpful i would just like to clarify the answer i am looking for. I am currently employed (paying my tax and NI through PAYE) earning around £25000 per year. Around july 2011 i was asked to carry out some small work (a total of £600) which i have done. At the time i read varying articles regarding freelance work, and havnt registered as self employed and i have not taken my freelance work any further. I would just like to clarify how i should pay tax on this, without going through my current employment, to ensure i am up to date with it. From what i have read i feel i should have registered self employed within 3 months (what would be the consequences of not doing this now - the job equated to 3 invoices for the work and no other work has been carried out since, with no intention of carrying out further freelance work in the near future). Your help would be very much appreciated.
9 January 2012
44. admin says:

As this work was a small one-off rather than an ongoing, organised business, it probably qualifies as casual income. In this case, request a tax return for 2011-12 by completing an SA1 form, then disclose the income in box 16 (if the layout is the same as last year).
10 January 2012
45. vacys says:

Hi, I’ve been registered as self-employed for last 4 years and always paid NIN. Also become employed in 2010 Jan and never canceled my self emplyoment and haven’t done any “private” work for 2010-2011. Now when I’m trying to do a tax return online and input that I was employed at that year and no income was from self employment at the end it says “Total tax repayable to you for 2010-11 £856″. Why does that happened? Do I did something wrong while filling self assesment o because my Personal Allowace gone up because of paying NIN as employment and self employment? The tax code on P60 is 647 M1. Thank you.
10 January 2012
46. admin says:

It is impossible to say for sure without a lot more information, but my best guess is:

1. You have been making 6-monthly payments on account of tax due to your self-employed income.

2. Now you are employed and no longer have self-employment income, you are paying tax each month rather than through your annual tax return.

3. Accordingly, the payments on account have turned out to be excessive and so will be refunded to you.
10 January 2012
47. Rob says:

Hi,

I’m due to finish a part-time degree in photography in April, and as of last august, started doing a few small jobs as part of a work experience module. I was thinking of starting up or registering myself as a business, when my course ends after our final exhibition in April. I anticipate that the one client that I was paid by during the module, is going to continue to give me work, as well as obviously getting new clients. When should I register and when would I need to start thinking about tax returns. I’ve read so many conflicting pieces of advice, even from the HMRC site.
I want to make sure that I start up properly with a clean book right from the start.

regards,
Rob
10 January 2012
48. admin says:

The regulations concerning the administration of tax are complex and always changing, as are HMRC’s interpretation of them.

It sounds as though you have been self-employed since August 2011. To be safe, register very promptly. There is nothing to be gained by delaying, and even if it turns out that you earn next to nothing, the worst that will happen is that you will have to complete tax returns showing no tax to pay.

Your first tax return will be issued in April 2012.
10 January 2012
49. Lee says:

Hi I was employed until September 2011 then I became self employed at the end of the same month, I have recieved my Utr number and set up my class 2 ni payments but am I due to fill in a self assesment before January 2012?
12 January 2012
50. admin says:

No, your first self assessment will be issued in April 2012.
12 January 2012
51. Mike says:

Hi, I’m in full-time work (approx 40k a year) but started an affiliate marketing website of my own almost three months ago. As of yet, the website hasn’t made any money at all. At this stage, is it necessary for me to register as self employed/sole trader, or should I wait until I’ve made my first sale? Many thanks.
17 January 2012
52. admin says:

You should register when the business starts. This is not necessarily when you make your first sale. It should be when you start actively marketing the business.
17 January 2012
53. Bill says:

I became unemployed in August 2011 and set up as a sole trader a few weeks later. My first return will be for the tax year April 2011-April 2012. Do I just calculate it from my time as a sole trader ie August 2011-April 2012 or does it include my income from April 2011-August 2011 when I was in full time employment but not self employed?
17 January 2012
54. admin says:

Your tax return for 2011-12 will need to include all taxable income received in that tax year, so it will include your final months of employment on a separate part of the form. Your self-employment accounts will start when that work started in August 2011.
18 January 2012
55. m jade says:

Hi

I’m just filling in my first online tax return as self-employed.

As I was also employed and on PAYE during the same time I started doing self-employed do I still have to put this employed income in on page 1 of the tax return, even though I have already paid NI and tax on it?

Thank you
21 January 2012
56. admin says:

Yes, absolutely. It is potentially very important in calculating your tax.
21 January 2012
57. Jackie says:

Hi

I am currently working part time earning £13,000 per year and have started working for a personal loan company making approx. £50 per week, however I have petrol, phone calls and a few other expenses per week which leaves me with approx. £30 per week. Should I register this March as self employed and how much on average per week should I keep to pay NI and Insurance ?
Thanks
21 January 2012
58. admin says:

You should register as self-employed straightaway.

You should allow about £6 per week for tax, being 20%, and your self employed income is not high enough to pay NI (you can apply for exception from Class 2 NI).
22 January 2012
59. Carolina says:

I was employed till Feb of 2011, during the next 3 months I was unemployed and I became self-employed in June 2011. I recieved a letter from HMRevenue which says that I have to send my tax return before 31 of January, should I send from June 2011 till 31 of December or is a mistake in the database and the right date to do it on 31 January of 2013?
24 January 2012
60. admin says:

Regardless of the reason, it sounds like HMRC have requested a tax return for 2010-11, and this must be filed on time or you will get fined. Include your employment income (from your P45) and the start of your period of unemployment, but nothing after 5 April 2011.
25 January 2012
61. Miguel says:

I received a letter from HMRC saying that I have to do a tax return because it exceeded my personal allowance. I would like to know which is the amount the HMRC take into account for that, becuase during this year I made £8570, they discount £1551 for taxes at the end I recieved £7019 which is less of the amount of the allowance. should I pay extra taxes?
25 January 2012
62. admin says:

The relevant amount is the amount before tax. Any deductions made during the year on account of tax are not deductible in arriving at your taxable income, but you will be given credit for those deductions against your eventual tax liability.
25 January 2012
63. Gavin says:

I am currently employed ( salary £15500 ) and will remain so but considering starting a small business on the side. I will be selling mainly imported products and don’t believe that profit will exceed £3000.
I also don’t intend on taking a salary from the business in the first year in order to build the business up.
How will my business be taxed on importing goods, sales and salary.
25 January 2012
64. admin says:

Any “salary” you pay yourself is irrelevant, as when you are a sole trader there is no separation between you and the business. You will be taxed on your profit before any payments to yourself, at 20% as above.
25 January 2012
65. Scott says:

I have been self employed since June 2011, when do I have to fill out a tax return? Also I do not earn more than 10000 a year, I was told the first 6k of earnings is not taxable? Is this correct?
26 January 2012
66. Admin says:

1. Any time from April 2012.

2. The tax-free personal allowance is £7,475 in 2011-12. This covers your total income, not just self-employed.
26 January 2012
67. Jon says:

Hello. I am currently employed full time, earning an annual salary of £37k, company pick-up with unlimited private fuel, 6% pension etc, etc.. However, a company i used to work for in Holland has asked me to represent them in the UK. This will gross me approx £20k per year in the form of “commission” payments or “finders fees”.. It all sounds perfect right? Well, it is.. a good additional income for very little effort. However, every penny that comes in to the new company will be profit. My question is, how do I get the money back out again..? I would prefer not to pay the tax man 40% of everything I make if I can help it! I would register as a sole trader and obviously inform HMRC.. Any advice would be most welcome..
26 January 2012
68. Admin says:

If you are running the new business as a sole trader, “getting the money back out again” does not apply. You are the business, so the money is immediately yours as soon as it is received from Holland, and taxed accordingly.

If you really wanted to avoid 40% tax, I suppose you could run the business as a limited company, pay no salary or dividends, then start taking the money out of the company once you have retired.
26 January 2012
69. Jon says:

Many thanks for the excellent advice. I am comfortable financially and did think about leaving the money in the business as a nest egg. Once again, many thanks and i now have some food for thought.
27 January 2012
70. jennie says:

hi, i have been registered since last september but havent recieved any info on when i should pay my NI. Can you please tell me? i dont want to find i owe them loads!! im a sole trader, earing below the the £7500, but not sure what to do? many thanks.
27 January 2012
71. Admin says:

You should have registered for Class 2 NI and made arrangements to pay it when you registered as self-employed. If not, you can use form CA5601 to start a direct debit now.

Class 4 NI is paid with your tax, your first payment will be due in January 2013.
27 January 2012
72. marg says:

Hi there,reading great advice from you,just what i am after!
I am self employed,part time.salary of £13,995.I have just done my Self ass. calculations and it says:

“Total tax, Class 4 NIC and Student loan due for 2010-11=£1,749″
It then goes on to say this:
Plus
“First payment on account for 2011-12 £874.60″
So the total to be payed on 31st Jan is £2623..Then a future payment of £874 in July…

My question is this.
It seems like i am already paying the tax for 2011-2012 with these two latter installments.I did this last year also, in theory paying in advance an estimation for 2010-2011 tax.(the tax year i am paying now).I feel like i am paying twice the tax that’s needed.Is this correct or do i deduct the estimated tax i paid during the year(ie the first and second payment on account for 2010-2011 which was £1700 in total) from what is calculated at the end of this Tax year? And if so,which section does it go under.
Advice greatly appreciated!
27 January 2012
73. Admin says:

You deduct the £1700 already paid from your liability due on 31 January 2012. It should be entered towards the end of the tax calculation part of the process, and the exact wording will depend on what you are using to file your return, but hopefully you will see it there. If you cannot find the box for it, it is not the end of the world, just pay the correct amount and HMRC will figure it out.
27 January 2012
74. Pat says:

Should I enter my working tax credits as income on my self assessment tax return?
29 January 2012
75. Admin says:

No.
29 January 2012
76. ian says:

I have a fulltime job currently earning around £30,000 but am considering turning a hobby into earning me a bit of extra cash, i understand i have to fill in a tax return and register as self employed even tho i am currently working fulltime is this correct ? also do need to pay extra national ins, once i register can i then advertise for more work ? i have also heard if i keep receipts for materials and equipment i purchase i can then deduct off my tax bill. thanks
29 January 2012
77. Admin says:

“I have a fulltime job currently earning around £30,000 but am considering turning a hobby into earning me a bit of extra cash, i understand i have to fill in a tax return and register as self employed even tho i am currently working fulltime is this correct?”
Yes, of course, did you not read the article?

“also do need to pay extra national ins”
Yes, as explained in the article.

“once i register can i then advertise for more work ?”
Of course, why not?

“i have also heard if i keep receipts for materials and equipment i purchase i can then deduct off my tax bill”
Allowable business expenses are deducted from the profits on which you pay tax. The government do not fully reimburse you for all your business expenses.
29 January 2012
78. Bobby says:

In 2010-11 I did some freelance work in addition to my full-time job (PAYE). I earned £3,000 and so registered for self-assessment. I’m now doing the SA and am wondering where I declare my PAYE earnings and tax from my 2011 P60? Which is the appropriate section/field?

Thanks
29 January 2012
79. Admin says:

In the Employment section.
29 January 2012
80. marg says:

Thanks for your valuable advice!Have a good 2012…Have bookmarked you in for January 2013!All the best.
30 January 2012
81. ian says:

Thanks for clarifing that information it was really helpful, one other thing i would like to ask is would my extra earnings change my tax code in my current fulltime job or would this be seperate from the self employment earnings as i would not want it to affect my monthy wage ? must say really helpful web site at last somewhere i can go to get answers to questions.
30 January 2012
82. Admin says:

By default, HMRC try to collect the tax through your salary in the following tax year by changing your tax code. If you do not want them to do this, tick box 2 on page 5 of the tax return before filing it and things will be kept entirely separate.
30 January 2012
83. donna says:

Hi, I am self employed and pay my NI contributions monthly, I have been offered a part time job. They want to pay me through the payroll on PAYE.Will this be really complicated for tax return purposes and do I still continue to pay my NI contributions and class 4?
2 February 2012
84. Admin says:

You may be able to stop paying NI if your combined income is over £35,000 per year. Otherwise, continue to pay it.
2 February 2012
85. andrew says:

Hi, i am self employed at the minute but have been offered a part time job working two days a week. If i decide to take the job then what will happen? can i still be self employed aswell?
3 February 2012
86. Admin says:

Yes, you can continue to be self-employed. Your situation will then be as generally explained above. Did you have any specific concerns?
3 February 2012
87. sheila says:

i work full time £16k year i am starting part time job £100 per week self employed where do i start with tax etc
3 February 2012
88. Admin says:

Exactly which part of the existing information on this page is not clear to you?
3 February 2012

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