Forum
Taxes
Hi,
I'm a bit confused about taxes. I read all the explanations on HMRC website, but I'm not 100% sure if I understand it correctly.
I worked in a permanent position until 2008-09-02, and they were paying my taxes (income tax and class 1 NIC) in PAYE system. I should be getting P45 soon.
On 2008-09-03 I filled self-employed registration on HMRC website,
and hopefully I'll have some revenues now :-)
Do I understand it correctly that:
* I need to set up direct debit for class 2 NIC by CA5601 form, independently from class 4 NIC and income tax?
* I will only have to pay income tax/class 4 NIC for the rest of the tax year (2008-09-03 to 2009-04-05) by 2010-01-31?
* HMRC will do all the calculations for me for no extra cost if I submit them information online by 2010-09-30?
* Are there any complication from being employed and then self-employed in the same tax year?
Thanks a lot for help
I'm a bit confused about taxes. I read all the explanations on HMRC website, but I'm not 100% sure if I understand it correctly.
I worked in a permanent position until 2008-09-02, and they were paying my taxes (income tax and class 1 NIC) in PAYE system. I should be getting P45 soon.
On 2008-09-03 I filled self-employed registration on HMRC website,
and hopefully I'll have some revenues now :-)
Do I understand it correctly that:
* I need to set up direct debit for class 2 NIC by CA5601 form, independently from class 4 NIC and income tax?
* I will only have to pay income tax/class 4 NIC for the rest of the tax year (2008-09-03 to 2009-04-05) by 2010-01-31?
* HMRC will do all the calculations for me for no extra cost if I submit them information online by 2010-09-30?
* Are there any complication from being employed and then self-employed in the same tax year?
Thanks a lot for help
- Contact in PM
simonsjdaccountancy
Messages count : 23Likes count : 0Registration : 29 November 2006
1. Yes.taw, post: 8334 a écrit : Hi,
I'm a bit confused about taxes. I read all the explanations on HMRC website, but I'm not 100% sure if I understand it correctly.
I worked in a permanent position until 2008-09-02, and they were paying my taxes (income tax and class 1 NIC) in PAYE system. I should be getting P45 soon.
On 2008-09-03 I filled self-employed registration on HMRC website,
and hopefully I'll have some revenues now :-)
Do I understand it correctly that:
* I need to set up direct debit for class 2 NIC by CA5601 form, independently from class 4 NIC and income tax?
* I will only have to pay income tax/class 4 NIC for the rest of the tax year (2008-09-03 to 2009-04-05) by 2010-01-31?
* HMRC will do all the calculations for me for no extra cost if I submit them information online by 2010-09-30?
* Are there any complication from being employed and then self-employed in the same tax year?
Thanks a lot for help
2. Yes
3. Yes
4. You want to make sure you keep sufficient funds aside to pay the tax bill on your self employed income on 31st Jan 10 - this usually comes as a bit of a shock when people make the transition from employed to self employed. It all depends on your level of income from employment, but it is not unusual to find your self employed income being taxed at 40%, with Class 4 NI on top of that (this assumes you were a higher rate tax payer in your employed role). Also on 31st Jan 10 you will need to pay your first payment on account for the following tax year, in addition to the tax bill for 2009. This will be 50% of the tax bill for 2009.
NI gets far more complicated in the transition from employed to self employed as there are maximum amounts payable. These rules get very, very tricky, so best leaving it to your accountant, or indeed the Revenue.
Finally, well done on managing to fathom as much as you did! - Contact in PM
taw
Messages count : 2Likes count : 0Registration : 9 September 2008Thanks a lot for your help, simonsjdaccountancy. It's a relief that I got it all right.