BEING SELF EMPLOYED AND EMPLOYED AT THE SAME TIME
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- Опубліковано 27 тра 2024
- Have a side hustle and wondering what the issues are with being self employed at the same time as being an employee? In this video Dan runs you through what you need to know.
Topics include:
Being self employed and an employee at the same time (UK)
How tax on a side hustle works
How national insurance on a side hustle works
How national insurance as a self employed person works
How tax works as a self employed person
Tax and national insurance explained
How to get a tax return
How to register as self employed
… and more!
If you have any questions on this, please comment below.
You can see more about what we get up to on the following:
LinkedIn (Dan): / danheelan
Instagram (Dan): / danheelan
Podcast: heelanhub.co.uk The HeelanHub Podcast, a show for small business owners.
Join our mailing list for tax tips at: www.heelanassociates.co.uk
Instagram (Company): / teamheelan
Facebook (Company): / heelanassoci. .
Twitter (Company): / heelanassocs
Web: www.heelanassociates.co.uk
Call: 02392 240040 Email: info@heelanassociates.co.uk
#accounting #businessaccounting #selfemployed #sidehustle #tax
Thank you for these videos! They are so helpful
Glad they are useful Evelin!
Really helpful video - probably the best one so far ! Thanks
Glad you enjoyed!
Very clearly organized and presented introduction and video. Explained exactly the situation I have. Thanks.
Glad it helped Clive!
Thank you! So informative :)
Glad you found it useful!
Love this thank you !!
Glad you found it useful!
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!
Fantastic video thanks! Helped answer some questions I had regarding setting up a "side hustle" 🙂
Glad it helped Chris!
Great video. Exactly all the right detail I wanted, clearly explained.
Glad it helped!
Very helpful video! Thank you so much.
Glad it helped Carl!
Cheers! Great help
Glad it helped Adelene!
Fantastic video|! Thank you, super concise and I didn't even need to speed you up|!
Glad it was helpful!
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!
Absolutely helpful Thank you
Glad it helped!
Wow you are super helpful thanks so much!
Glad it helped!
Really helpful, great video thank you. Subscribed and will check out more videos, all explained in a great way.
Thanks Simon glad you enjoyed.
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!
fabulous thank you so much. Simple and effective :)
Glad you found it useful!
This is so helpful thank you :)
Glad you enjoyed :)
Topman, been on my mind for years and 2021-2022 may be the year for it 👍
Do it 👊
Thanks this very helpful
Glad it helped!
Ok thanks got myself a receipt book
Great! Or 'Dext' as it's now called for some reason...
Thank you 😊
You're welcome 😊
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!
🙏 really appreciated
Glad you enjoyed!
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
Thanks so much
You're welcome!
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.
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?
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? ua-cam.com/video/kGjnnKvudc0/v-deo.html
@@HeelanAssociates I ve seen it now)), up to the point, thank you very much
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
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...
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.
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 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.
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...
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.
Hi Heelan, great videos but maybe if you can have illustrations on the video that would be great
Noted!
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.
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.
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.
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: ua-cam.com/video/D6uU2_v73qI/v-deo.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.
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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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
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.
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 :- )
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’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.
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 ua-cam.com/play/PLkzy-8ym2nIg5idhdqsyq9lTPOo6-U99T.html
thanks
No problem, hopefully it helped!
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.
I’ve watch a couple of your videos, very clear and easy to understand information.
I’ve taken early retirement from teaching and will be getting a pension below the tax threshold. I’m taking on some tutoring, less than £4.5k pa. This will take me above the tax threshold but will I need to pay NI too?
Unlikely you will be NI at that level, other than potentially class 2 (circa ~ £150 a year).
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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.
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)
ua-cam.com/video/VATU3Q7p-7E/v-deo.html
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.
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.
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.
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: ua-cam.com/video/meiBmOjQh0k/v-deo.html
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 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.
Hi Dan, thank you for your amazing videos! i have learnt so much whilst doing my taxes myself this year. i have started to do amazon delivery and i have set my expenses to be all to do with petrol and food is that okay? how do i pay for national insurance i thought i was just supposed to do the tax return on the gov website ? is there anything else i need to do ?
thank you so much !!
Glad you are enjoying the vids.
Be careful with food. Its hard to say in a comment but some food might be fine, some might not be depending on how you operate.
Petrol have a look here: ua-cam.com/video/PPnzNvLp3k8/v-deo.html
National insurance is paid as part of the annual taxes, sorted out in the tax return.
@@HeelanAssociates Thank you so much for your reply! in regards to food i have added the food that was purchased whilst i was doing amazon delivery... hope thats okay!
Really helpful video - thank you! I have taken early retirement as of December 2021 and now have income from company pensions. These are taxed PAYE. I also have interest income from various investments. I am already registered for self assessment as I have completed online self assessments in the past. Am I right thinking I should complete an online self assessment return after April 2022 to declare my sole trader income? Am I right in thinking I need to add my income and tax paid from my various P60s from 2021/2022 and interest received gross from bank accounts? HMRC will know what they've already taken from me as PAYE so will then just tax the sole trader profit after the Trading Income Allowance? Also, do I need to tell HMRC in advance that I am a sole trader or do they find out when I submit that 2021/2022 return? Many thanks!
Hi Julia,
It's like one big bucket. So all income from all sources go into the one return, but there are boxes for any tax paid to be taken into account. You could tell HMRC to make sure they have you as self employed (for National Insurance purposes), but as you say, will find out either way!
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).
This was a great video. Have subscribed to the channel. I don't know if you can help answer this, but if you have set up a Ltd Co and just take out the minimum earnings (for 2019-20 this was £118pw) how do you enter this on your self-assessment form? I'm technically not 'self-employed' as it's a Ltd co, but I don't have a PAYE no either - and my understanding is you don't need one just for minimum earnings, so I can't enter it either as employed or self-employed earnings. I have literally spent 3 hours on the phone last few days trying to get through to HMRC...!
Register a payroll and submitt ‘RTI’ returns would be best.
There was an argument when RTI came out you didn’t need to, but reality is you need to in most cases. Otherwise certain things just don’t line up.
In theory though you could enter earning in employment pages, you just put in the paye reference for your employer (as you won’t have one).
@@HeelanAssociates thank you so much for replying, this is all starting to make sense to me at last! Very much appreciated.
Hi, thanks for this great video (and all the others - I've been through a marathon of video watching in your channel), it clarified a lot of my queries.
I am thinking about starting a side gig that is probably not going to make me much money but every little helps :) and I have 3 questions:
- Should I register straight away as a sole trader before buying any business equipment or can I get the tax debate if I do that at later stage? If anything, I can deduct that expense against my main salary?
- Do you have any video of sole trader vs partnership? The business I'm going to open will be with my girlfriend so would we get £2000 (£1000) tax free allowance? I am puzzled because I'm almost on the 50k threshold, so it makes sense to be all in her name (or bigger part on the partnership) because if we make more than £1000/2000 a year (fingers crossed), I can potentially start paying 40% taxes.
- Is the £9500/£6500 for NI purposes just from the side gig earnings or is it cumulative with my "normal" salary?
Once again thank you for uploading all these very useful videos on your channel.
Long one so will answer the ones I can do briefly :- )
1 Should register when you start trading. If you incur expenses before hand thats fine, you can generally class them as being incurred on day 1 of the trade.
2 I don't, mainly because partnerships are taxed similar to sole trade and these days you don't actually see that many. Often people do LTD companies at that point instead, but they have there place in some circumstances.
3 The NI is basically per 'job' income, rather than an annual allowance.
Hope that helps :- )
@@HeelanAssociates thank you very much
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%).
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.
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
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-
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.
Thank you for this vid. Got a question - does the £1000 or below where a self assessment is not required - does this reset every tax year? Plus the main job
Yes it does it’s per tax year.
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!
Hello! This is a very informative video. I need your help though because I have a question?? I have a regular job at a pub and now I will become self employed for the first time in my life and I will work in a beauty therapist salon as well as a beauty therapist for 2 times a week but I will not be renting the space. Now, I will not be renting the space there but the boss said he will pay me 13pounds per hour+10% comission and I have to become a sole trader for that. Can I claim the 2 times a week commuting with public transport to this area on my future tax return???? I would appreciate your answer!
Hi there,
I have a ton of questions about this that are probably too difficult to answer in a comment here but will give you some thoughts.
1 The beauty arrangement feels more like disguised employment than self employed from your brief explanation. Be sure you are actually self employed, otherwise you are missing out on pension, holiday pay etc.
2 if you are self employed, the travel rules are complex but again on the surface level info you’ve given, no, commuting to your fixed ‘base of operations’ wouldn’t be allowed as a tax deductible expense.
Basically it’s the same outcome as an employee - they can’t claim a deduction for commuting to work.
Hope that’s some help
Thank you SO much for this valuable video! Please can you tell me how National Insurance contributions work if you are a) past pension age but not yet taking the pension b) paid by a company such as a school for salaried employment with tax code 1257L, and c) also working on the side in self employment and earning over 1000 pounds a year? This is a new venture, and I will be earning over 1000 but I'm not sure how much over. If I make, say, 2000 per year with the side business, how much tax will I pay? THANK YOU in advance!
Generally you won’t pay NI over state pension age, have a quick read here www.gov.uk/tax-national-insurance-after-state-pension-age
Thank you very much!
Heya..Sorry for the question. I am also looking online. What if your side hassle generates less than £6k for the financial year. Do you then need to pay additional NI. I can see there is £3.15 pw for above £6725. What about if it is below that?
Best way to answer this as it’s a little complex is link you here for a great article on it, covers your q www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed#toc-what-is-the-small-profits-threshold-
Hi so I'm part time employed at a hotel but been on furlough for about a year, started a home cleaning business under an agency's umbrella in December, when I'm doing self assessment text do I need to do it just for the self employed earnings or do I include the earnings from the hotel in it as I already pay NI and PAYE tax?
You put both on. It all goes into one bucket. There is a box to put in what tax you paid no your hotel job. Different pages for each source.
thankyou for this video its very informative, got a question, i am ready to star an ebay business but am thinking it would be easier to start at the beginning of the next tax year in order to do my tax return for 21/22 easier. Part of me really wants to start now but i need to buy some supplies to get started and also i have brought a lot of stock over the pat 4/5 months but havent kept any evidence of paying for this stock. Im worried if i started my business now my tax return would be impossible because i don't have records for my stock etc.
would you say it would be easier for me to just start my business from the new tax year in April?
It could be worth starting on 6th April just to avoid having to do a extra tax return for a few month period, but there isn’t much in it. If you want to do now, do it!
The lack of records is a problem if you want to claim the tax deduction regardless of when you do it, but do you know how much exactly you spent on everything?
@@HeelanAssociates thankyou for the reply, id say ive spent roughly £500 on stock, but i still need to buy a label printer & packaging supplies which will probably cost another £200-300
@@HeelanAssociates Probably sounds like a stupid question but if i had to do a tax return for this year id have to look through the past 12 months wouldn't i? Or would it just be from when i apply to be self employeed?
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
Hey! I started and set myself up for self assessment in June 2021, employed one day a week and my earnings aren’t high enough with them so I don’t pay tax with them. I am self employed the rest of the time. First question what date do I need to fill my first year tax form in? Second question what do I need to put into my tax form… both employed and self employed money together or just self employed profit?
Thank you x
It all goes on one form.
Think of it a bit like a bucket, all goes in, one tax bill. If you happen to pay tax at some point on any source, there are boxes for this to be taken into account.
You are likely to have your first return from 6th April 2022.
So you'd include all earnings from Job from 6th April 2021-5th April 2022, and your self employed income from start in June 21 - 5th April 22. Return is usually due (and any tax to pay) on 31/1/23.
Image on the tax return if you like pics: instagram.com/p/CUvQTTVvYmH/
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 😊
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.
Great video thank you, super helpful ... I have a question if I may, and no worries if you don't have time to reply. I currently have full time employment and earn 30k a year. My website for my side hustle went live on 12th March 2022 (but I didn't register as a sole trader) I didn't earn any income from the 12th March to 5th April 2002 in the side hustle. I am now thinking to register as a sole trader to get the ball rolling with the paper work, however, I have no idea if I will earn 1K or more in this tax year. If I register as a sole trader right now, will HMRC require that I register my business from the time my website went live, which falls into the last tax year, or can I register it from this tax year 6th April 2022? hope that makes sense.
Self employed registration is from when you started trading. Trading is matter of fact (and opinion to a degree!). The fact the site existed doesn't mean you were trading in itself, many businesses set up things ready to trade in advance. If you felt you started trading (say you started to attempt to monetise it now for example), you could put the date in April when you did this.
If you want the bedtime reading on trading....www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20200
I have a question about seperate bank account; what type of account, can it be a savings account, personal account and does it have to be with the same bank or different one?
Can be different bank.
The bank would say a proper business account, but from an accounting perspective it doesn't matter.
Savings may not work as you might have a debit card and direct debits.
Some further comments at point 6 here: www.heelanassociates.co.uk/setting-up-self-employed-or-sole-trader/
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??
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.
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....
Do sole traders pay tax on all earnings or only on the money remaining after it is spent restocking and self-payment etc.? Also would you know if a new Government Gateway account is needed to create a business if the person starting it already has an account but attached is their personal bank details and email? Thank you for your video!
As a sole trader, they pay tax on income, less tax deductible expenses. Drawings /self payment don't count / aren't tax deductible.
On the ID, best thing to do is try to log in with it and see! Sometimes we've seen clients with multiple IDS.
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 ?????
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.
Do you know if it is ok to use cash basis accounting for your self employed earnings if you are also employed within the same tax year?
I contacted HMRC and they said being employed doesn't affect how I do my accounting for self employed earnings which makes sense.
That’s correct Jeff!
Yup totally ok, employment isn’t relevant to the cash basis decision here.
Amazing video... Learnt a lot from it but got a quick question. I'm currently employed and started a side hustle. I earn around £20,000 gross on my fully time job and I won't make more than £1000 from my side hustle so would I need to apply for UTR and do an self assessment?
Glad it was helpful!
If you earn under £1000 currently there is no requirement to reg, but still could be worth it, especially if you've made any losses.
@@HeelanAssociates okay thanks for the reply. so if I did make a loss what would I need to do? Would I do the self assignment and show how I made the loss?
Hi, with a side income, can I fill out the self assessment and just be sent a bill and I just pay it in one go without any affect to my main job salary tax code or tax I pay towards my main job salary, so it is completely separate? Thanks
It all goes into one ‘pot’ on the tax return. So if you made a loss on your trade for example you might be able to offset that loss against your job, which would likely generate a tax refund.
In theory (!) you should pay the right amount of tax in your job, but as a catch all it’s all caught in the same tax return. You put amounts received and tax paid and it calculates any bill.
Sometimes after completing a tax return HMRC may adjust your tax code and tax your job for some of the expected future tax bill.
Very helpful video thanks! Just to ask the £1000 you talk about is that pure profit or return? So for example if I get £1000 but only £200 profit do I need to set up as a sole trader or only after £1000 profit? Thanks
Have read here probably easier to read www.heelanassociates.co.uk/self-employed-1000-trading-allowance-explained/
@@HeelanAssociates I just read this and maybe I’m missing the point but I have the same question. Is the 1k based on profit ?
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!
Do I need to open business bank account? Or can I use personal account
Thanks
Point 6 here expands on that www.heelanassociates.co.uk/setting-up-self-employed-or-sole-trader/
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?
ua-cam.com/video/QBXEq931h98/v-deo.html
@@HeelanAssociates thank you. I will take a look now. Thank you for replying in an old video, it means alot.
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 is great. Thanks so much! What if i just earn £15k in my self employed business and I have no full time job, after deducting the personal allowance which is £12k, do I have to pay NI 4?
Yes you would pay some class 4 (over the current threshold) and a lump sum of Class 2.
Super helpful thank you. I earned 73k gross in my normal PAYE jobs in tax year 2019/2020 and i earned £4124.32 gross with my amazon hustle with £200 expenses, do i still get the £1k free trading allowance? if so i assume my tax will be £1160? ( excluding the payment account for this tax year) any help much appreciated
So you can choose to either claim the £200 ‘real’ expenses or the £1000. So if you did the trading allowance your profit would be £3124
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!
ua-cam.com/video/J8j1GAZRAT0/v-deo.html
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