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When to pay tax? - Starting own business (secondary to full time job)

Martin BlankMartin Blank Posts: 1,689
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in Advice #1
The question is in the title really. Say you have a 'normal' full time job. 39 hours a week, you're paid monthly, all your tax is sorted by the nice accounts lady, nothing to worry about.

Then you decide to start your own business by yourself, as a sideline for more cash. Be it writing columns freelance for a website, or taking pictures at peoples weddings etc, with a view to getting it going 'properly'. At the moment, you're just accepting cash, or a cheque, nobody pays by card as you dont have the means to process it.

At what point, do you have to register your new found interest as a business? When do you have to start paying tax? When do the banks start asking questions as you're depositing cash into your account all the time?

Comments

  • Keefy-boyKeefy-boy Posts: 13,613
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    #2
    Firstly, the banks aren't going to start asking questions, and even if they did, you have a perfectly legitimate answer.

    As far as tax goes, sounds like you will just be trading as you as an individual, and it will be incidental to your full time job.

    If you don't already complete a tax return, ask for one after the end of the financial year (April 6 2011) and declare your sideline earnings there. Be sure to put aside sufficient to cover your eventual tax bill. Take into account all your earnings in case you are pushed into a higher tax bracket.
  • GlenGlen Posts: 12,076
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    #3
    Bear in mind that you will be using your tax free allowance in your PAYE income so everything you earn on the the self employed work will be taxed at at least 20%.
    Make sure you keep records of every bit of income and expenditure for the work so you can calculate the correct taxable earnings when you need to fill out a tax return.

    I take it this work has only started in the current tax year and not before April 2010?
  • gemma-the-huskygemma-the-husky Posts: 18,116
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    #4
    you pay tax twice a year, half in July, half in January.

    the tax man effectively "guess-timates" what you should pay, and then adjusts it to the real amount after you send your accounts in.

    you need to tell the IR you are self-employed/have other income - otherwise you will get behind on tax, and may also get fined or incur penalties for late or non-submission of income tax returns.

    It is YOUR responsibility to declare income, and pay over tax. if the IR suspect you have other income they will ask you to complete a tax return, but won't tell you what they know. At this point if you SIGN the tax return, and conceal income they know about, it becomes more serious.

    Income from casual jobs etc etc is still income and should be declared.

    you also need a different class of NI stamp, and the IR will sort this out as well. (not sure exactly how this works, if you have a PAYE employment as well.)
  • [Deleted User][Deleted User] Posts: 13
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    #5
    You have to register as self-employed with HMRC within 3 months of starting work for yourself. You'll be sent a tax return on an annual basis and you should use the information on the P60 from your employer to set out how much tax you have already paid through the PAYE system and (provided you complete your return before the end of October each year) HMRC will calculate how much additional tax you need to pay.

    Robin
  • TommyGavin76TommyGavin76 Posts: 17,066
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    #6
    robinjfisher wrote: »
    You have to register as self-employed with HMRC within 3 months of starting work for yourself. You'll be sent a tax return on an annual basis and you should use the information on the P60 from your employer to set out how much tax you have already paid through the PAYE system and (provided you complete your return before the end of October each year) HMRC will calculate how much additional tax you need to pay.

    Robin

    This.

    If you don't tell them within 3 months you are breaking the law.
  • frisky pythonfrisky python Posts: 9,737
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    #7
    OP check out Business Link. And HMRC. Depending on how you feel about filling out a tax return you can always engage an accountant to do it for you.
  • slapmattslapmatt Posts: 2,359
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    #8
    gemma-the-husky wrote: »
    you pay tax twice a year, half in July, half in January.
    Depending on how much tax you owe, you can have you tax code for the following year adjusted accordingly, so you don't actually have to send them any money directly.
  • gemma-the-huskygemma-the-husky Posts: 18,116
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    #9
    slapmatt wrote: »
    Depending on how much tax you owe, you can have you tax code for the following year adjusted accordingly, so you don't actually have to send them any money directly.

    yes - i realised afterwards we were talking about a second income, not necessarily a main self employment
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