Self - employed - How much can I earn before I have to register with the tax man?

[multitasker]

I've been doing some music tuition for a while and its been going well, however I know I will have to register to pay tax on my earnings soon.

How much can I earn tax free and how do I get registered as self employed?

[dweezle]

mULTITASKER

yOU SHOULD REGISTER AS SELF EMPLOYED WHETHER YOU EARN ENOUGH TO PAY TAX OR NOT. tHERE IS ALSO THE ISSUE OF nATIONAL iNSURANCE. Eeek - sorry about caps. When I became self employed I found a local accountant who will prepare my tax return for about £200 - I can provide details of income/expenss etc but can't face the tax forms. Plus, a good accountant will find all sorts of deductions you perhaps aren't aware you are entitled to - thus more than paying for their £200 fees. And the accountant registered me as self employed and for NI.

[policywonk]

I think the personal allowance is about £4,800 - have a look at the Inland Revenue website. It's very helpful.

[clumsymum]

You Must tell the tax office that you are self employed, no matter how little you earn.

You need to keep up your NI contributions, thius is VERY important, firstly for pension rights, but secondly, shorter term, because if you have some accident or illness, and need to claim incapacity benefits, you will be ineligible if you have not paid NI. I speak from experience.

You don't need an accountant immediately, if you keep things simple, you may not need one at all, but do ring the tax office and register.

[vacua]

register anyway, exactly what dweezle said plus although you might not anticipate it, your earnings could spiral up and over before you know it and don't forget about other taxable income you may otherwise overlook - voluntary NI contributions are low and easy to set up - you can register over the phone, it's easy

[vacua]

how to register

[vacua]

my NI contributions don't entitle me to incapacity benefit, I'm not sure this is even possible for self-employment?

[clumsymum]

YES IT IS.

[vacua]

I must sort that out then, it would be a small load off my mind - maybe I already am eligible? How do you check? curses person who gave me false advice last year

[Lilymaid]

You pay Class 2 contributions if you are self-employed. If your earnings are below the small earnings exception limit (about the same as the tax allowance) you do not have to pay contributions, but you must apply to the HMRC in order to qualify for the exception. You can choose to pay NI contributions voluntarily even if your earnings are below the limit, so that your contribution record does not have gaps in it. If you are at home looking after children or other dependents and not earning anything you can qualify for home responsibility protection so that you do not have to pay NI. At some point in the future (presuming they haven't lost your records) the HMRC will contact you concerning gaps in your record, so it is necessary to keep your records so you can show what you were doing during any tax year.

[multitasker]

Thanks all, I will register this week.

[Skramble]

Its VAT people you don't need to register with until you reach the threashold.