Can anybody advise me on being SELF EMPLOYED? DH to be precise

[MamaG]

DH is going to ahve to go self employed as of Monday

I've been made redundant

He won't be employing anybody, just pimping his ass out to anybody who will pay (well, his hands, but it doesn't sound the same does it)

What the heck do we do?
What records do we need to keep?
What can we deduct from the gross profits?

Any help much appreciated

We won't earn that, so thats ok
its a bit of a minefield to me, tbh

I don't have excel (dinosaur pc) - wonder if a new laptop with it on could be deducted...

When we say deducted, what do we mean? (we being you )

If he earns, for the sake of argument £20k in a year before anything is taken off

say we've spent £2k on work stuff, materials, phone etc

we then spent £1k on national insurance (jkust for sake of argument)

That would leave £17k - is THAt what is taxed? Or is he taxed on the 20K

As you can see, we are VERY confused here!

taxed on the 17K

Say 20K earnings.
3k tax deductable expenses (not sure whether NI qualifies)
Leaves 17K
Taxed on the difference between the allowance and the 17K (i.e. think you can earn about the first 5K ish tax free). So taxed on about 12K.
Would also have to pay NI Class 4 contributions for the last 5K ish over 7K ish (note am vague on figures)

Right, so we pay tax and NI on the figure AFTER all teh stuff we've spent comes off?

MamaG

I keep records of everything I spend on our business, so for us,

food,
cleaning materials
flowers
mileage
diesel
part electricity
part oil
DH's wages
advertising
repairs
gardening
anything esle we can think of

these are taken off our total turnover/earnings and then tax paid on that. If you register a loss then no tax to pay.

Yes MamaG

Thanks a lot, you've all been invaluable!

It is boring but very important to save at least a quarter of what he earns for tax. I'd advise setting up a separate bank account just for tax and a standing order to go out regularly from your main account. Its one of those things you promise yourself you are going to do but somehow all the money seems to get spent and the dreadful day comes when you have to pay the tax and you have to take out a loan to do it!

HM Revenue have a newly self-employed helpline as well if you get stuck on anything.

Also you pay tax twice a year, end January and end of July.

You only pay tax twice a year if you have more than £500ish to pay.

Take a note of the mileage on his vhecle now. You can (possibly) claim the van/car as an asset of the company and it's value gets offset from teh income too...If he does private milage you need to record that - because say he does 20K miles per year but 5K are personal use he has to adjust his van related expenses (like servicing etc. to 75%).

Skimmed thread, but you cannot take of NI contributions, so in your example £20k income, £2k expenses £1k NI the taxable profit would be £18K.

FYI Ni contributions are about £25-30 per month and then you pay some more once you know the profit(there are differnet types of NI but I won't go into that as it's confusing!)

RFirst off, register with HMRC, this can be done online which will set up the NI contributions as well. this should help HMRC's website is actually quite good!

Keep a record of everything you spend and everything you earn.

A new laptop would be a business expense so
you could get one with excel

If you have any more questions may I guide you to the freelance/self employed topic which maybe a better bet for asking

DP pays £26 per quarter in NI contributions (class 2, or is it 3?)

The he pays class 4 when he does his tax return. Is he doing something wrong eddas?

nope sorry being dim it is per quater not a month[bluhs] then class4 when you do the return.

THanks all! I didn't even know there was a SE topic

I'll ask MNHQ to move it

DH is a builder. He doesn't earn a huge amount. One thing he would recommend is a good accountant to take care of the messy tax returns. Don't try to do it yourselves unless you are very competent and confident!

Sorry if this has already been said - have only skimmed the thread.

thanks m

more info
here

Thats really helpful Sam thanks

Mama G, one thing I would suggest is a separate business bank account for his SE stuff. When Inland Revenue are looking at taxes, they are looking at taxing income LESS what can be proved as a business expense. So if I were you, I would keep every receipt, invoice etc that your husband has had to pay in connection with his business.

Also, if he pays into a pension, gives charity donations, keep a record of those as they are tax deductable too.

If your husband does NOT have a vehicle EXCLUSIVELY for business use, then you are allowed to claim 40p per mile up to 10,000 miles per annum and then 25p per mile after that.

The tax laws have recently changed and it can either be £3 per week for using a home office OR a reasonable rent for use of premises, depends what your husband does. Me, I work from home all the time so I choose to use the reasonable rent rate. If your husband is out and about most of the time, it would be safer to claim the £3 per week rate.

There's probably more but I am a bit tired tonight...