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self employed how much to put aside

(12 Posts)
Chippychop Fri 04-Mar-16 17:51:30

It looks like I may be offered a role paying £1500/wk as a self employed contractor. Any advice on how much I should put aside for tax/ni I'm trying to work out my net income.thx

19lottie82 Fri 04-Mar-16 18:42:26

Look on a salary calculator site to help you work out what you should be paying.

Would it not be easier to visit an accountant to sort all this out for you, and perhaps set up a limited company?

SaveSomeSpendSome Sat 05-Mar-16 11:37:44

For a £6000 salary a month you need to be putting away £1700 this includes your national insurance.

llhj Sat 05-Mar-16 11:39:20

Best to put away a third imo.

abbsismyhero Sat 05-Mar-16 11:40:27

i would go for a third to be safe

nannynick Sat 05-Mar-16 13:32:02

On annual profits of £78,000 I think you would pay around £24,600 in tax, NI C1, NI C4. You would then also have payment on account for the following tax year... so add 50%, £12,300 giving you a first year tax bill of £36,900

So this is around 47.3% of your year 1 profit.

I would though query if your £1500 per week is your business profit per week. Talk to an accountant who knows your particular industry well. Make sure you don't get caught by IR35. Look at what expenses you would be claiming - travel, equipment, accounting, professional body membership, training etc.

SaveSomeSpendSome Sat 05-Mar-16 13:50:54

I earn £74,000 a year and pay £21,000 in tax and national insurance together

ClashCityRocker Sat 05-Mar-16 14:04:29

A third will be too little - bear in mind in January you will need to pay 50% of the tax and NI for next year with a further 50% in July.

Nannynick's figures are about right, I think.

ChemicalReaction Sat 05-Mar-16 14:08:49

Hijack.. If you are using the paye basics computer package as a director to payroll yourself and the NI contributions start appearing, how do you pay them? Do you just get a letter?

nannynick Sat 05-Mar-16 15:38:57

The problem is year 1 where you get the extra 50%.

If you start the business in April 2016, your first payment is not until January 2018, which is based on the business profits during 2016/17 financial year (April 6th 2016, to April 5th 2017). So you could say you have earnings during April 2017-Dec 2017 to pay towards that 50% additional tax.

So it depends how you look at things. The key is to remember that you get that big tax bill, then going onwards you pay every 6 months.

Not sure if this months budget may have an announcement about if that will change... with digital tax accounts, I do wonder if payments will be made more frequently.

powertotheparslaii Sat 05-Mar-16 16:34:24

I agree with the 3rd suggestion

And I strongly suggest you see an accountant or tax advisor

Chippychop Tue 08-Mar-16 21:09:19

Thanks for all your inputs. It's given me lots to think about. I think I will seek some tax advice rather than trying to manage it myself as I have some private income from a rental too.

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