sorry if this is a stupid question, but I want to be clear on the matter:
This time it's regards to myself, I am self employed and employed full time also, I am unsure about if I will be needing to pay the weekly nic stamp because when I first set up self employed I applied for the exempt certificate as I hadn't made any profit back then, but now I will be starting to make profit do I need to inform hmrc of this.
I have gone over my personal allowance with my employed work and if I start making profit on my self employed work I won't get a personal allowance off this, am I correctly thinking?? so therefore all my profit will be taxable....is this correct?
Please could someone help me clear my confused mind sorry if it sounds like a daft question but I wouldn't want an unexpected tax bill!!!!and I haven't long started and have a lot to learn!
Hi Lor, I may be wrong but on the letter that came with my NI class 2 certificate of exception, It says if your earnings from self employment are expected to be below the threshhold of £5075.00 for the 2009 tax year you do not have to pay class 2 nics. So I would not inform them until you have reached this amount.
Hope this helps
-- Edited by Denise on Saturday 24th of October 2009 05:31:15 PM
Hello Lor. Is your company stopping you Basic Rate Tax or Are they using your Free Pay Tax allowance of 647 which is the Single Personal Allowance iE £ 6470. If they are using your tax allowance AND THEY ARE NOT STOPPING YOUR TAX AT BASIC RATE. then you business profits will be taxable in full. You will not be able to deduct the allowance again. Find out from your Pay advise what your Employer is doing regarding your pay calculations. With regard to your self employed NIC Class 2 it is £2.00 per week and you also pay a class 1 from your place of employment again check this out with HMRC to see if you benefit. I HOPE THIS HELPS IN SOME WAY.
I do the wages at my work, my tax code is 647L, therefore I would have used my personal allowance, so that means I will have to pay alot of NI, I will be paying in my employment, then again the weekly stamp and also on my self assessment tax return is this correct, seems like a lot of NI to pay!!!
-- Edited by lor on Sunday 25th of October 2009 10:25:35 AM
In that case you will have to pay tax on your adjusted net profit for tax purposes and you will no be allowed to deduct the personal allowance of £ 6470. As regards the National Insurance yes it is quite a lot you are correct. Have a word with the HMRC and they should guide you on the ni contribution for Ni as you are paying a class 1 ni why do you have to pay a class 2 for self employed status i sure HMRC Will clear this up.
Thanks Davey, I will be calling them shortly to clarify, I will have made profit when I get paid from my next couple of jobs, fingers crossed, I will call them when this happens! once I find out the answer from the horses mouth I will update this thread!
I was always under the impression that you need to pay Class 2 NI's when you begin to be self employed, regardless of whether you make profit or not! I thought it had no link to your financial figures at all. So if you find to the contrary, please let us know!
If you are employed PAYE, then you normally pay tax and NI in the normal way and when you complete your SA, all of your income is added together and the tax paid through PAYE is then deducted and you pay the balance. NI is also calculated for self employed status.
I am both employed and self employed. My employment is taxed at BR and I take my personal allowance from my self-employment. I pay the self-employed stamp via DD and my profits (above 5075) I pay 8% NI.
I was always under the impression that you need to pay Class 2 NI's when you begin to be self employed, regardless of whether you make profit or not! I thought it had no link to your financial figures at all. So if you find to the contrary, please let us know!
That's worrying, I thought it was only if profit was made....I will phone them and find out.
I have phoned HMRC after panicking, they have informed me that, I do not need to pay class 2 nic until I make a profit over £5075, if I have remembered the figure correctly, even though I am employed and over my personal allowance they have said the personal allowance figure isn't related to the nic class 2 contributions.
I believe that you still have to pay class 2 national insurance even if you don't make the profit threshold during the tax year. HMRC refund the NI paid in that situation.
To avoid having to pay NI if you don't think you will exceed the threshold, you need to apply for a Certificate of Exception from HMRC. This last for two years but you can cancel the certificate anytime , if you want to or if you exceed the threshold.
