Thanks Mariah, very helpful!
How about a situation where I'm receiving payslips from a part-time job (the pay is quite low so no tax is deducted, but NI contributions are) Is it relevant when I come to do my self-employment tax returns?
Yes you will have to declare your employed wage on your self assessment, there is the option for this.
How tax is calculated when you are employed and self employed example:
Employed income (before deductions) = 10,000
Self employed
profit = 15,000
Total = 25,000
Minus allowable income (11,500)
Taxable amount = 13,500 this is all your income minus the amount you?re allowed to earn before paying tax (10,000 + 15,000 - 11,500Tax and NI due20% tax of 13,500 = 2,700
Minus tax paid through employment (if you paid any)
N.I 12% of income between 8,164 - 45,000 (25,000 - 8,164) 12% = 2,020
Minus N.I paid through employment
This is assuming you haven?t gone over 45,000.
Basically when you submit your self assessment you will claim your self employment and your employment wage and then deduct the tax/NI already paid through your payslip to give you the final amount.
If this is your first year submitting a self assessment it?s good to bear in mind that if your tax bill is over 1,000 you will have to pay 50% on top because they like you to be in credit
Hope this helps and doesn?t confuse you!!
Feel free to PM me
