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Sole trader with full time job. How to do it?


julzt 15 181 England
10 Feb 2008 8:45AM
Just to confirm - this is correct.
Quote:Quote:I've just looked into this a bit more and being self-employed, you can choose either the pence per mile method or the cost method where you claim fuel and other running costs, etc. I shall doubly check with my father-in-law though.You are correct. We have just been told this by an accountant and a solicitor. Its an either or choice.

Lee Smile

peterjones 19 5.1k 1 United Kingdom
10 Feb 2008 9:42AM
and if you take a passenger you can claim 45p per mile and if you go by bike you can claim 20p per mile (or is it 25p) I don't go by bike much.
I was employed and self employed for years without any problems "enjoying" sending in the sa form annually. I must confess submitting it online is much easier and you know how much you are in for immediately.
11 Feb 2008 12:51PM
Don't ring up to register until after you start the business or you get an angry woman on the other end of the phone telling you off and to ring back within 3 months of your start date.........

not that I did that obviously *whistles*
SamLS 15 237 United Kingdom
11 Feb 2008 1:16PM
I'm looking at registering myself so this is good timing for me.

A question though, does anyone know if you can claim tax relief on capital equipment that you bought BEFORE your official business start date?

Sam
cambirder 17 7.2k England
11 Feb 2008 4:25PM
Yes Sam, you can transfer that equipment into the business. If you go on the IR's 2 half day courses for start-ups all is explained
phil beale 17 1.5k United Kingdom
11 Feb 2008 5:52PM
does that include training as well just about to sign upto a course that will cost 1000+ but not looking at starting the business until june july

Phil
rxheard 15 92 United Kingdom
11 Feb 2008 6:16PM
I've also been thinking of doing the same thing.

But what does registering as a sole trader mean in terms of tax? If I'm already paying top rate due to my full time job, will I be hit for top rate in respects of the photography business?
cambirder 17 7.2k England
11 Feb 2008 6:30PM

Quote:If I'm already paying top rate due to my full time job, will I be hit for top rate in respects of the photography business?


Yes you will, although if you make a loss in the 1st year you can offset that against tax paid against your employment.
dasantillo 15 231 1 Wales
11 Feb 2008 7:35PM

Quote:Yes you will, although if you make a loss in the 1st year you can offset that against tax paid against your employment.


It's not just the first year, you can backdate it three years. For example, suppose I worked full time in 04/05. In 05/06 I quit work and became freelance full time. I made a loss in 05/06 and offset it against the fulltime work income, getting a refund of tax paid. In 06/07 I also made a loss and again offset it against tax paid in my fulltime employment getting a refund of tax paid.

There's a box to tick on the self assessment for this (3.16 I think?). HMRC will then ignore it so you need to write to them and then they'll pay up. Incidentally, their supposed guarantee to reply within 28 days is a joke - it took them several months to reply to me and then they ignored half of it.

KR

Dan.
rxheard 15 92 United Kingdom
11 Feb 2008 8:27PM

Quote:Quote:If I'm already paying top rate due to my full time job, will I be hit for top rate in respects of the photography business?Yes you will, although if you make a loss in the 1st year you can offset that against tax paid against your employment.


Not sure I follow. Does this mean I can get back tax already paid from my FT job in the financial year? If that's correct, then it's surely a no-brainer and I should register as a sole trader.
cambirder 17 7.2k England
11 Feb 2008 8:55PM

Quote:It's not just the first year, you can backdate it three years


I was trying to be a bit more optimistic Smile


Quote:Does this mean I can get back tax already paid from my FT job in the financial year? If that's correct, then it's surely a no-brainer and I should register as a sole trader


Yes, if you lose 2k in the 1st year you claim that against tax paid from your job. If the 2nd year you make 5k profit you pay the top wack on all of that.
dasantillo 15 231 1 Wales
11 Feb 2008 8:56PM

Quote:Not sure I follow. Does this mean I can get back tax already paid from my FT job in the financial year? If that's correct, then it's surely a no-brainer and I should register as a sole trader.

Yes, you can get fined 100 if you don't declare yourself as self-employed within 3 months.

Very simple example (figures very, very rough):
Full Time: Paid annually 30,000 PAYE before tax which works out as 7500 tax.
Photo Work: Earn 1000 but buy 7000 camera, thereby making a loss of 6000.
End of year tax: Offset the 6000 loss against your 30000 income and get a tax refund of 1500 paid into your back account. The loss effectively make your income 24000 so you get a refund of the tax difference.

KR

Dan.
julzt 15 181 England
11 Feb 2008 9:12PM
If you are registered as self employed AND emlpoyed, you will have to pay two lots of national insurance... don't get caught out... its a killer...
ejtumman 16 2.8k England
11 Feb 2008 9:25PM

Quote:If you are registered as self employed AND emlpoyed, you will have to pay two lots of national insurance... don't get caught out... its a killer...


If your earnings from self-employment are going to be under the relevant threshold, which is 4635 for the 2007/08 tax year, you can apply for a certificate of excpetion.
rxheard 15 92 United Kingdom
11 Feb 2008 9:42PM
This is a great help, thanks for the advice. What if I tell my employers that I want to go "freelance", set myself up as a sole trader/contractor and then combine incomes. Sure I will be "in profit" for the year, but will it be more tax efficient because of all the things I can "legitimately" claim for ie. VAT and petrol etc?

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