New Start Up Tax Question


#1

Could anyone possibly help me? I am starting up and will begin trading as sole trader from September 2012 which is when i’ll be registered

Im still employed and will leave here on 31st August. I am really confused about tax returns and what will be financial year and how they calculate my tax owed

Do I basically start from scratch in terms of tax in September? When do I do my first return and for what period?

Thanks in advance for your help


#2

Hi Sally

You’ll be doing PAYE from your current employer so HMRC will have that cash from you already. From when you first start the business (NB: not from when you first start earning money, but from when you open your doors for business!) you should register with HMRC as self-employed paying Class II National Insurance contributions. These are about £10/month so not a biggie!

In April 2013 you’ll get a reminder from HMRC to say that you need to submit your tax return for April 2012-April 2013 by 31st January 2014. Your self-assesment tax return will calculate how much tax you owe based on your employed and self-employed earnings and the tax you’ve already paid under the PAYE scheme.

I’m not an accountant - so definitely check this! Most accountants will give you a freebie session to explain what records you need to keep and HMRC also run really helpful workshops too - despite their reputation, they are not the bogeyman and are very keen to make sure you pay the right amount of tax and have an easy ride of it!


#3

Thank you very much. This is really useful. Its all a bit of a minefield and I want to ensure I get it right from day dot ideally.

I think im going to need to find an accountant for at least advice as there seems to be more to think about than I originally thought.

So, just to clarify, you’re saying if I start trading in Sept 2012 I wont self assess, and then pay any tax, until April 2014?

Thank you, I really appreciate your help


#4

You’d need to register straight away though - and obviously you need to be saving the money you’d be due to pay from Day 1, it’s a good idea to go speak to HMRC - their self-employed helpline is really good!