Help! TAX when you already work Full time?

[Buttonberry]

Hi,

We're trying to sort out all of our Tax but whenever we talk to the tax office they get all confused because we work full time and do Buttonberry in our spare time. Is anyone else in the same situation?

Lisa xx

[JBJB]

I don't know if this thread covers your question?

http://www.craftsforum.co.uk/showthread.php?p=32846&highlight=wrong#post32846

[Buttonberry]

Thanks JBJB, i'll look!

[Katianne]

I am in the same situation as you. Basically I was told that as long as I don't earn over something like £64k a year in total, I don't have to pay tax (so think I'm safe!). In terms of NI, you can apply for exemption as long as you don't earn more than about £4600 (I think, check that figure though) a year. When you register as self employed they send you a form to apply for an exepmtion certificate. Hope this helps!

[candles by lisa]

Hi,

Yep I'm in the same boat and agree as long as you don't earn over a certain limit it wont affect your tax from the day job. You still pay NI but if you don't earn over £4K I think it is you can apply for a small earners exemption and you don't need to pay class 2 NI.

Hope this helps.

Cheers.

Lisa

:D

[mjbelkin]

I am in the same situation as you. Basically I was told that as long as I don't earn over something like £64k a year in total, I don't have to pay tax (so think I'm safe!). In terms of NI, you can apply for exemption as long as you don't earn more than about £4600 (I think, check that figure though) a year. When you register as self employed they send you a form to apply for an exepmtion certificate. Hope this helps!

No no no no no.

The £64k turnover is the VAT registration threshold - the point at which you have to register for VAT.

If you work full time, then you can register to not pay NI on your self-employed earnings, but they will all be eligible for Income Tax, because you will have used your personal allowance in your employed job.

[0103media]

No no no no no.

The £64k turnover is the VAT registration threshold - the point at which you have to register for VAT.


Yep .. That the VAT threshold ... Nothing to do with income tax..


The second you register as self employeed your tax code changes in your full time job and dependant on how much you make it will effect the tax on the job BUT its nothing to worry about..

[Katianne]

Yep .. That the VAT threshold ... Nothing to do with income tax..

The second you register as self employeed your tax code changes in your full time job and dependant on how much you make it will effect the tax on the job BUT its nothing to worry about..

Gosh they are useless, that's not what they told me. When I rang for advice they told me exactly what I stated. Grrrrr!!!! So if my tax code chages, does that affect how much tax I pay? E.g. will I pay more?

[julz]

My friend works full time for a company. She has recently took over a business as well which makes her the owner. She is curently paying 40% tax on the second income!

Not sure how it works really but get as much advice as you can, the tax man always always gets his money in one way or another!

Always take advice off a registered accountant keep yourself right and avoid a possible hefty payout down the line.

Self employed = bookkeeper for the goverment!:D

Julz:)

[candles by lisa]

When I got in touch with the tax off they said not to worry as I wouldn't be earning enough from my self employment for it to affect the employed tax. However I obviously still need to fill in a tax return for the self employed portion so they know how much I should be paying..

Cheers.

Lisa

[nattynetty]

When I got in touch with the tax off they said not to worry as I wouldn't be earning enough from my self employment for it to affect the employed tax. However I obviously still need to fill in a tax return for the self employed portion so they know how much I should be paying..


Make sure you do your accounts very carefully Lisa and put down the costs/expense for every bit of material, postage, milage to craft fairs etc that you have spent. If you do that and find out that you've actually made a loss then you'll get a tax refund which cynical ole me thinks is why the tax office seem to be telling people in your situation that you don't need to worry about it all.

Edited to say that milage can really cut down your profit (and tax) - at 40p a mile even the weekly trip to the bank in town was nearly £150 in expenses for me last tax year, start adding trips to suppliers and craft fairs and it really adds up.

[Buttonberry]

Blimey it's a complicated caffuffle isn't it? Thank you to all of you who replied i was a little worried since the Tax office seemed to be pretty darn useless! I resorted to writing a letter in the end!

I have been keeping a note of everything so far so i should be able to do all my sums when the time comes too :D (Didn't think about petrol for things though so will make sure i do that!)

Thanks again guys xxxxxxxxxxxxx

[JBJB]

40p a mile

Is that what you charge then for petrol - I've made a note of all my mileage but had no idea what you were supposed to charge for it.....

[icecreamgirl]

40p is what the tax man 'allows' you for petrol expenses per mile to get to a non-permenant place of work.

[MrSwirl]

40p is what the tax man 'allows' you for petrol expenses per mile to get to a non-permenant place of work.

It depends on how many miles you do in a year. After 10000 business miles (IIRC), you can't charge the mileage at the same rate.

[MrSwirl]

When I got in touch with the tax off they said not to worry as I wouldn't be earning enough from my self employment for it to affect the employed tax. However I obviously still need to fill in a tax return for the self employed portion so they know how much I should be paying..

Cheers.

Lisa

Hmmm - not sure that's right. Get it in writing if you can, or make a note of who you spoke to, in which office, and when.

If you are selling something purely with the intention to make money, then the income you make from that is taxable. It may not be enough to move you into a higher tax bracket, but you will still need to pay tax on the income. If you are doing something as a hobby, or (for example) selling old stuff you have at home on eBay, then this does not count as taxable income.

HMRC are taking a much greater interest in what people are doing with regards to extra income - eBay, car boot sales etc. - and if they think you are doing it as a business, they will tax you accordingly (plus back tax, interest and possible penalty fines).

[mjbelkin]

It depends on how many miles you do in a year. After 10000 business miles (IIRC), you can't charge the mileage at the same rate.

It goes down to 25p per mile ;)

[icecreamgirl]

It goes down to 25p per mile ;)

Yes, it explains all that on the form...
Just remember... whatever the amount.... better for it to be in your pocket than the tax man....
So claim for EVERYTHING!!!!!!!!:mf:

[MrSwirl]

Yes, it explains all that on the form...
Just remember... whatever the amount.... better for it to be in your pocket than the tax man....
So claim for EVERYTHING!!!!!!!!:mf:

I believe the policy is "maximize allowable expenses" - this is somewhat different from claim everything!

There is a thread over on CUK (where I normally post) asking if buying a diamond ring, sofa, plasma screen TV, or renting a skip "to throw out office paperwork" would be allowed.

[0103media]

Its pretty simple imho..

If you are happy to stand up in court and prove that its was a bussiness expense that stick it down..


There is a good chance that 1 or 2 of you will be picked at random to subject everything to the tax man, due to the amount of members now on the forum...

I asked my accountant last your if I could claim a holiday that I had cos of a photo blog I have that make me a little $$$ but he said no which I agreed with as I really wouldn't be happy trying to explain this..


I have a client in barcelona and the money comes direct from them 1 month after I go and work there.. So flight hotel ect are easy to prove and the fact that the flight times and length of time out in spain is in line with working and not a holiday..

[JBJB]

So ... I have two sewing machines, an iron and daylight bulb-lamps on pretty much for 12 hours a day, and these are obviously necessary to my business. How do I calculate what that is costing in electricity?

[ellie]

don't forget depreciation on your sewing machine ;)

[mjbelkin]

don't forget depreciation on your sewing machine ;)

Depreciation isn't tax deductable - it gets added back to the taxable profit figure. Instead you get capital allowances.

[EMEvans]

The easiest way to do your depreciation would be to do the straight line method. Work out how long you would expect your sewing machine to last you (the life), then devide the cost of the machine over the x amount of years.
Sample
Machine = £500
Machine life = 10yrs

£500 / 10 yrs = £50 depreciation per year.

If your not sure the life of your machine then choose the reducing balance method.
Sample
Machine = £500
1st year depreciation @ 10% = £50
leaving you a balance of £450 for your machines value, the next year's dep'n is worked out on that amount.
2nd year depreciation @ 10% (of £450)= £45
and so on......

[mjbelkin]

It doesn't matter whether you use the staright line or reducing balance method, depreciation is not tax deductable.

Fixed assets have capital allowances instead, at a rate determined by the Revenue.

You get 50% in the first year if its tax year 04/05, or 06/07, otherwise its 40%, and then 25% on each subsequent complete year on a reducing balance.

First year allowances are not pro-rata'ed for the year, but written down allowances are.

[JBJB]

So ... I have two sewing machines, an iron and daylight bulb-lamps on pretty much for 12 hours a day, and these are obviously necessary to my business. How do I calculate what that is costing in electricity?

But depreciation aside, I still don't know how to calculate what I can charge in electricity costs.....?

[mjbelkin]

You need to try to work out how much higher your electricity bill is because you are working from home.

Is there anyway you can unplug everything else for say half an hour, and just run your business items, and see how many electricity units you use up?

That should be long enough for a sample which we can then multiply by your number of hours usage, without defrosting the entire contents of your freezer.

Or alternatively. Don't use them for an hour, read the meter at the start and end so you know what normal usage is for a typical hour, then use them for an hour, again reading the meter at the start and end, and you should be able to see how much more is being used.

Does that make sense?

What you don't want to do is mentally 'set aside' one room in your house for crafting/business, and charge all bills associated with that room to the business (ie, my house has 6 rooms, excluding kitchen and bathroom, I use one for business, so one-sixth of all bills are business), because that will create a capital gains tax liability when you sell the house.

Hope I haven't confused you.

[colynscottagebears]

Very Confused by all this, I have to say I have never though about tax. I work full time and took up needle felting as a hobby. I have sold bears to friends and family and a couple on ebay. The most money i have made is £25 in a month and most of the time months go by without making anything. I have no record of what supplies i have bought or what i have sold Do I have to register as self employed?

[Katianne]

Very Confused by all this, I have to say I have never though about tax. I work full time and took up needle felting as a hobby. I have sold bears to friends and family and a couple on ebay. The most money i have made is £25 in a month and most of the time months go by without making anything. I have no record of what supplies i have bought or what i have sold Do I have to register as self employed?

From my understanding yes - you need to keep a record of what you spend and sell. You need to register as self employed and fill in a tax return for each year. I am in the same boat as you - I work full time but craft as a hobby, but because I sell my mosaics I need to register as self employed and declare what I spend and make. If I were you, I would start keeping a record and register from now onwards - you will be asked to complete a tax return for April 07-08 next tax year.

[colynscottagebears]

From my understanding yes - you need to keep a record of what you spend and sell. You need to register as self employed and fill in a tax return for each year. I am in the same boat as you - I work full time but craft as a hobby, but because I sell my mosaics I need to register as self employed and declare what I spend and make. If I were you, I would start keeping a record and register from now onwards - you will be asked to complete a tax return for April 07-08 next tax year.

ok thank you for your help. So need to get a self employed form then?
ok this sounds as if it`s going to be complicated:confused: