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Self Employed status and tax credits.

(5 Posts)
Pavlovthecat Fri 28-Sep-12 12:52:42

I am potentially about to start 'work' on a self employed status working freelance, in addition to my salaried position. I think I understand the tax side of it, although may well ask questions in another thread at another time on that subject.

I don't know if/how much money I will earn at this stage, it is early days and I am likely to make a negative sum in the first month or two as I have some initial outlay to get myself up and running.

I am not anticipating this income to exceed £3000-£4000 (before tax NI etc) even if it takes off with better results than I expect, as this is only for a bit of top up income and to expand my skill base, at least for now anyway (who knows where it might end up).

My questions are:

1. When do I tell the CT people that I am registered as self employed as a second job? Do I tell them now? Or do I wait until April when I will know my income for the financial year in total for both jobs and give them all the details then? Do I even need to tell them at all that I have two jobs - do I just need to tell them the total income combined?

2. If I need to tell them now that I am self employed as a second job, will it affect my tax credits for this year, bearing in mind it will not exceed the £5000 cutoff (i think that is was it is now?)

TalkinPeace2 Fri 28-Sep-12 15:40:36

Second income counts as (and is ALL TAXED AS) topup income - be careful as it may cost you as much in tax credits as you'll make from it after tax

you need to tell them right away.
I'm not sure what they do for figures now - in my day it was half yearly.

Pavlovthecat Fri 28-Sep-12 16:40:28

what does that mean 'topup income', how is that different to normal income? I think i know about tax, ie I am going to be walloped for tax right? is it 25%?

DH has earnt much more this tax year anyway as he started his job half way through last tax year and only worked part time for a while, before that he was not working for that tax year, so this tax year will show two wages and I am expecting them to reduce our TC significantly next year, although tbh a large amount of it is childcare even now and DS turns 3 in Nov so it will go down anyway (as will our childcare bill!), part of the reason for this extra money really is to make up any loss/reduction to nothing.

I don't even mind if it equals itself out in that what earn is taken off, because our income will only go up, so eventually we will be not reliant on any tc at all. That'll be nice grin

I shall call them as soon as I start then, better that than getting in trouble with The Government grin

TalkinPeace2 Fri 28-Sep-12 16:43:43

Hi there
have a look at the page I wrote for ebayers - most of the information is generally applicable and only one of the links (about flat rate VAT) needs mending !
Feel free to print it and highlighter it :-)

Yes, your self employed earnings will go on top of your PAYE fully taxable at 20%

Pavlovthecat Fri 28-Sep-12 16:58:15

yes that is what I thought, I will put 20% of my earnings each day/week/month whatever into a separate account. It won't affect my CT award any more than if it were a pay rise by the same amount in my salaried job though? I will take a look at the link thank you.

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