I dont know if this is the correct section to post this. Im relatively new to this quickfile thing, and I chose it simply because it has Paypal integration, which I will be using for most if not all of my transactions.
What I need to know and forgive me for being thick, is - this.
I already work full time as an employee, however I have since started an Ebay business which is doing quite well so far and I forsee making anything between an extra £50 - £80 a week. I need to be able to work out how much extra tax to pay on top of what I already pay through my full time job.
I`m using quickfile to keep track of my ins and outs and my profit etc. as everything is done via Paypal albeit with a few credit card transactions here and there (as some of my suppliers do not use Paypal).
How do I calculate the extra tax to pay? Do I need to register as a business with Companies House as well, or notify HMRC that I have an extra income.
Can I pay the extra tax weekly along with my wages tax? (as this would be preferrable as if I keep it in my account I`m bound to spend it).
Sorry but this isn’t a question for quickfile. This is a question for an accountant. Please seek one.
Depending on how much your salary is will depend on what tax bracket and indeed how much extra you will have to pay.
Whether you need to be a Ltd company or a sole trader again is for an accountant to advise you of.
But which ever method you decide of course you need to let hmrc know, you will have statutory requirements to file some sort of accounts or tax return and pay the tax due.
You need to talk to a qualified accountant who can see your specific situation and give proper advice. There are guides you can find online giving general advice but there’s no substitute for the real thing.
Essentially, if you’re making more than £1000 turnover (not profit) per year on your sales then you are considered to be in business as a sole trader and you would need to register as self-employed and keep records of all your income and expenses. HMRC will require you to fill in a self assessment tax return giving your total income and expenses each year, and you will have to pay tax on the difference, and possibly some National Insurance as well. If you owe less than £1000 to HMRC for a given year then they can take it out of your employed wages by adjusting your tax code, if you owe more than that then you have to pay it yourself directly.
Assuming you’ve only started your business this tax year (since 6th April) then there’s no rush to register, you’ve officially got until 5th October next year - the tax return for the tax year 2019-20 isn’t due til the end of January 2021 and if you’re paying the bill through your employer then the payments won’t start til after that.
Like I say, it’s well worth talking to an accountant even if it’s just a one off consultation to get your own facts straight, as the rules around exactly what counts as allowable expenses are complicated. Getting advice so you do things correctly from the start can pay for itself in the long run.
Why are you ringing hmrc? I advised to seek an accountant. Not to sound harsh but hmrc will not advise on your best route to take or the most efficient one. They are there to collect as much tax as possible not help you to pay the right amount which an accountant would do.
Hi Clayton,
With the limited info provided here is a rule of thumb, your job will use all your tax fee allowance, so you will pay 20% tax on your profits as long as you are not in the higher tax bracket.
Your quickfile profit and loss page will show your current profit so you know how much tax you owe
If after running expenses (like use of home, phone & Internet, computer, possibly 45p per mile mileage allowance etc.) you average £60 a week profit that will total £3120 at year end, so that’s £620 extra tax.
If it’s £80/wk then that’s £4160 profit and £832 tax yet no NI as you are under the NI thresholds. If that’s all it is the HMRC may add the tax to you tax code so it is collected via your Job.
As Ian said, you need to register as self employed and do a tax return. Your first tax return for your first year as self employed, will probably not be due until after 6th April 2021 and tax due by end of Jan 2022 unless it’s added to your jobs tax code.
You can message me if you want a little free help.