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Old 2nd of January 2011 (Sun)   #1
capturephotography
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Question Question about paying tax?!?

Ok question about payin tax? ( U.K )

I'm part time self employed making picture frames.
Say for example I can earn 5,000 before paying tax and I earn 6,000
do I
A.) pay tax on the full 6,000
or
B.) pay tax on just the 1,000
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Old 2nd of January 2011 (Sun)   #2
PeteA
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Default Re: Question about paying tax?!?

You pay tax on the 1,000.

What happens is you get charged tax in the different levels and you get a certain amount of tax free.

http://www.hmrc.gov.uk/rates/it.htm
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Old 2nd of January 2011 (Sun)   #3
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Default Re: Question about paying tax?!?

Cheers pete!

I wasn't really sure, I was thinking that was the case but wanted a certain answer lol.
It's just this is my first offical year on paying tax as part-time self employed as well as my current full time job.

Cheers
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Old 2nd of January 2011 (Sun)   #4
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Default Re: Question about paying tax?!?

Hang on - if you are in a full time job then that will take up your tax allowance under PAYE.

You don't get one allowance for your full time job and another for your part-time self employment.

Roughly how much do you earn at your full time job? Is it over 37,400?

If you pay 40% tax in your full time job then you will have to pay 40% on all part time earnings as well.
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Old 2nd of January 2011 (Sun)   #5
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Default Re: Question about paying tax?!?

Sorry I didn't read that correctly, I presumed by your statement that you were part time and didn't have a full time job.

Nightstalker is correct, you'll have to pay income tax on your total earnings. Your NI contributions will be different as each job is considered separate so the contribution will be based on the earnings from that particular income.

I would suggest consulting with an accountant. It's well worth it.
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Old 2nd of January 2011 (Sun)   #6
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Default Re: Question about paying tax?!?

see an accountant, and then buy oodles of new kit to negate your tax liability and receive a rebate.
it's your duty as a human being to avoid (not evade) paying tax, let's face it you'll only be denying some politico a new home improvement
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Old 2nd of January 2011 (Sun)   #7
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Default Re: Question about paying tax?!?

yup, forgot to mention NI.

You need to read up on Class 2 and Class 4 contributions. Simplified slightlty one is a fixed amount per week and the other is a % of earnings. You add the two together to work out what you have to pay.
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Old 2nd of January 2011 (Sun)   #8
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Default Re: Question about paying tax?!?

Quote:
Originally Posted by Nightstalker View Post
yup, forgot to mention NI.

You need to read up on Class 2 and Class 4 contributions. Simplified slightlty one is a fixed amount per week and the other is a % of earnings. You add the two together to work out what you have to pay.
i'm not sure, but i was under the impression from the tax man himself that NI only kicked in on second incomes once you hit the threshold in that income.

i might be confused
oh bugger
potential hefty bill on the way.

/goes to find an accountant
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Old 2nd of January 2011 (Sun)   #9
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Default Re: Question about paying tax?!?

Quote:
Originally Posted by andrew748 View Post
i'm not sure, but i was under the impression from the tax man himself that NI only kicked in on second incomes once you hit the threshold in that income.

i might be confused
oh bugger
potential hefty bill on the way.

/goes to find an accountant

Unsure on this as I have never been employed and self employed at the same time.

Will check though.
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Old 2nd of January 2011 (Sun)   #10
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Default Re: Question about paying tax?!?

Looks like you are right :

"The technical answer you seek is that there is a separate "per job" system for NIC which will allow earnings up to the earnings threshold in each unconnected employment before any NIC is paid. There is also an overall limit which kicks in if all jobs total more than the Upper Threshold to stop them paying excessive NIC - so those with more than one job win both ways."
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