NI an expense?

[crafterholic]

Hi!
This is probably a really stupid question, but I was wondering whether NI payments count as an expense? Also, if I earnt below the threshold tax amount, do I not have to pay any tax at all?

Also, I earnt interest in my ISA account and a few pennies in my current account - is this taxable?

Thanks for any help :-)

[Caroleecrafts]

Your savings and current account would already have had tax deducted, unless you requested to be paid interest tax exempt.

When you fill out your tax return there is a place to enter interest earned and tax paid. NI is not classed as an expense.

[Decor4Kids]

I may or may not be correct but this is how i understand it. When you fill in your tax return in january it will tell you how much tax is payable but you should not have to pay any if your under the limit. Also i was advised that any profit that was made can be put back into the business for growth and then on paper you have not earned anything so do not have to pay any tax. NI releif is available for low earners and you could be exempt. best bet is to speak to HMRC selfemployed helpline. I have found them very helpful and friendly.

I am also new to this tax stuff and will be getting down to it in january.

Good luck

Neil

[AliCat]

You definitely don't have to include any details of your ISA as this is totally tax free. Your current account is a different matter and you can be taxed on the interest paid (LOL - What interest!!)

[PreciousCreations]

They're right Isa's are tax free.

NI cannot be claimed as an expense as this a personal cost - it insures you and has nothing to do with the business.

I attended a free course recently provided by the inland revenue - check out my blog (see my sig) for details on how you can enrol on one - very useful courses on tax, self employment and self assessment and they're free!

Suzi

[Daisy & Me]

All good advice above - but would query why you have NI payments if you are below the threshold? Self-employment NICs fall into two categories; class 2 and class 4.

Class 2 is a set amount payable on a weekly basis, however you should be able to get an exemption certificate from HMRC if you are low-income earner.

Class 4 NICs are payable on the amount of gross taxable profit - therefore if you are earning below the taxable threshold these payments will not be due.

Of course, you may have been extremely organised and been paying NIC anyway...!

[PreciousCreations]

The lady on the course advised that unless you've a full time job and paying NI that way, then you should make cat 2 NIC regardless of low earnings. This is because it will insure you if you fall sick or go on maternity and some of eventualities like should you need to go on benefits. If you were off sick for 4 weeks would it seriously damage your income, could you keep above water?

Cat 2 is something like £2.40 a week so it's not loads. If you are a low earner you wont have to pay any more NIC but will still be covered.

Suzi

[crafterholic]

Thanks very much for the info guys, very helpful!

[crafterholic]

I've just been filling in the self assessment, and there are boxes for untaxed and taxed interest - do I just leave them blank? ISAs don't seem to be mentioned anywhere.

I'm quite unnerved about how quickly I've done the forms - most of it was putting 'No' in a drop down box lol - Am i doing it wrong?!

[AnnieAnna]

I always thought the tax bit of the interest the bank gives you on your savings is automatically taken off by the bank.......because if you are a child you have to tell them not to do it..........
AnnieAnna

[AliCat]

I've just been filling in the self assessment, and there are boxes for untaxed and taxed interest - do I just leave them blank? ISAs don't seem to be mentioned anywhere.

ISAs won't be on the form as they are completely tax free so the IR don't need to know anything about whether you have one or not.


I always thought the tax bit of the interest the bank gives you on your savings is automatically taken off by the bank.......because if you are a child you have to tell them not to do it..........
AnnieAnna

As far as I understand it, some banks take the tax off and some don't! But then I leave all that to my accountant so I may be completely wrong. My husband's bank sends him an annual interest/tax statement but mine doesn't so maybe my bank has already taxed the interest and his hasn't?... :confused: I have to say, I don't mind paying out for an accountant to sort all my paperwork out for me!! I just find the whole IR thing soooo confusing :confused::confused::confused::confused:

[AnnieAnna]

I think that if you are not earning enough to pay tax you are not earning enough to pay an accountant..............:nopity:
AnnieAnna

[PreciousCreations]

It may be useful to try and book on the self assessment course as soon as you can - as they will go through the form with you, using the link below.

If you dont have time to go on before the return is due in then at least it will help you for next time, to save you getting a bill that you dont actually owe. There may be a helpline you can ring for advice too on the website.

http://www.hmrc.gov.uk/bst/advice-team-events/work1.htm

[crafterholic]

Hi!
Thanks people, I've just submitted my return :-)