Employed and self employed help. I don’t understand it.

[JusWunderin]

How does it work? My brain can’t compute what’s going on on Google I need someone to dumb it down for me.

Basically:

I work part time employed and earn £1400 a month.

I’ve just started doing a bit on the side that’s paying about £1900 a month (very rough estimate as I’ve made about £850 in just under 2 weeks)

How much tax will I pay? I’m not the sharpest tool on the box and i am deathly afraid of getting this wrong and im dealthy afraid of getting it wrong and being sent to prison 😂

You will be required to fill in a self assessment tax return, which will include your salary and amount earned as self employed. The system will calculate the tax and NI that you will owe.

If you’re very unsure pay an accountant for advice and their services.

You'll use your tax free allowance in your employment, so at the approximate rate you're earning, roughly 20% of your profit will be taxed.

However, if you're at all unsure, speak to an accountant. They will look at what costs you can claim against earnings (and so reduce your tax liability) and make sure that everything is included and taxed at the right rate.

You need to register as self-employed and complete a tax return. There are spaces for your figures as an employee from your P60, and a separate section for your self-employment. The system will calculate your tax liability and deduct what you have already paid. You then pay the difference.

I would suggest that you save a third of your earnings to be on the safe side, at least for the first year.

And don't forget that you only pay tax on the profits of your self-employment, after you have taken off all allowable expenses. The HMRC website details what you can and cannot claim as business expenses.

If you really aren't sure what you are doing, then please find an accountant and ask for a consultation, where they can explain how to do it. They will also look at whether it is more tax-efficient to be self-employed or to open a Ltd Company.

Put 20% of your profits aside each month. At the end of the year complete a self assessment online (it’s actually quite simple for most cases) and use that 20% to pay. You may even be presently surprised and the bill may not be quite all of what you’ve saved.

Keep by 30% as you may need to pay national insurance on the self employed income as well as tax