A Tax question.

[Baz-Cem]

Hello all,

I'm being forced down the second job route as this bloody credit crunch has hit me hard.

I very much want to keep the business running but I will also have this full time job as well.

How will this situation work as far as the tax man is concerned?

I was told long ago that the second job would be taxed at 40% but now I'm told they are taxed the same unless I go over the VAT threshold, then it gets abit sticky.

Greatfull for any help.

Baz.

 

[weldequip]

Never heard that one, as far as I know it's all dependant on combined earnings...so long as the two together don't go above the standard threshold you'll pay standard rate tax.
weldequip

 

[English Steve]

As Weldequip said, providing you stay under the threshold (£34800/yr for 2008/2009) you will pay basic rate tax. Have a look here.
Even if you end up going over the threshold, you should only pay the higher rate on the proportion over £34800.

 

[GeorgeB]

I'm being forced down the second job route as this bloody credit crunch has hit me hard.

Good luck with any new job. I fear we all need luck, given the state the UK economy is now in, even compared to other leading countries. Why else would our currency be in freefall against the Dollar and Euro?

>I very much want to keep the business running
>but I will also have this full time job as well.

No law against that but you do need to contact the taxman to let him know you're starting the new venture. You must do this, or you would be breaking the law. No need to contact anyone about VAT because that only becomes necessary if your turnover exceeds about £60,000. But neither should you add VAT to any bills you give out, and you can't claim back VAT on purchases, either.

>How will this situation work as far as the tax
>man is concerned?

Once registered as above, you'll almost certainly need to fill in a tax return, if you don't do so already. Just report income less costs = profit or loss

You only pay tax on any profits. If your existing job pays more than about £6000pa, that will likely use up your personal allowance. So any profit from the new venture will all be taxed at basic rate. I think that's 22% approx. A figure of 40% tax is only charged on any total salary+profit from BOTH jobs once that total is above about £40,000 (all figures very approx).

>I was told long ago that the second job would be
>taxed at 40%

Only if you're already on a salary of close to forty grand.

>but now I'm told they are taxed the
>same unless I go over the VAT threshold

Your source is wrong. Income tax and VAT are two completely separate issues.

For further info:
http://www.hmrc.gov.uk/businesses/tmastarting-up-in-business.shtml

 

[Baz-Cem]

Thanks for info lads.

As always, a great help.

We're in a bad way as a country at the moment. Hopefully it won't last to long and people will start spending again on their homes.

Probally won't happen until house price's start going back up though

Cheers,

Baz.

 

[weldequip]

We're in a bad way as a country at the moment. Hopefully it won't last to long and people will start spending again on their homes.

Naah...we'll be fine. Interest rates will be at zero by March 2009 and then they'll start printing more money...so there'll be more to go round for everyone!
weldequip

 

[rtbcomp]

...then they'll start printing more money...

I've already started. If anyone's interested I can sell you a pack of 10 £20.00 notes for £250. You won't tell the difference from genuine ones!

 

[weldequip]

 

[Wozzaaah]

Hehe, very good RTB
Do you do franchises? Sounds like a good business venture

 

[Baz-Cem]

You can already get them around here for a tenner each. J

ust take them to jobs worth kids at the tills in the super markets. They never check them so I'm told.

 

[Justme]

Have done the same under two different methods

1, When moving jobs / contracting I paid emergiency tax on all earning & then at the end of the year balanced it all against my selfemployed income on a self assesment tax return.

2, when fully employed via the same employer I was under the PAYE scheme & they taxed me at the correct rate but at the end of the year I filled in a self assesment form to declared the self employed earnings & paid the tax on it.

I personaly prefered option 1 as I was claiming money back at the year end but option 2 might be better in todays climate as you keep more money in the bank till the end of the year.

Justme

 

[Robotstar5]

Do you do franchises? Sounds like a good business venture

"some financial investment required"

 

[English Steve]

I use option 2 in Justme's post.

 

[peterd51]

Hi,

I've worked full time but for the last 20 years or so had part-time work from time to time (usually Sunday Markets). Generally I'll keep track of everything, stock in and out, fuel, car costs, postage, telephone, etc, and knock up an excel spreadsheet.

I give this to the accountant each year end, about October generally, and she works out what tax I need to claim back! She charges me around £250 and I get a tax refund between £800 and £1500 every year. This is on top of the £100 or so profit that I make each week on a market!

I have no idea how she does it but it's legal.

One point to note though...while I was working for three different employers she's found that they were applying the wrong tax-code to my full-time earnings so it's worth having someone who knows what they're doing check out any pay-slips.

My current HR/payroll muppets were taking £100 a month extra off me! Fortunately the accountant got it back for me...

Regards
Peter

 

[Baz-Cem]

Thanks for the advice Peter,

I will defo keep track of everything even more now.

Baz.

 

[irondarren]

Baz you got a website up yet?

 

[Baz-Cem]

No website as of yet m8.

Where you been keeping yourself?

Hows business?

All the best m8.

Baz.

 

[irondarren]

Baz bussiness has been good keeping me very busy. Much of the work coming from the website, which is why i asked if you had yours up and running, as i would have put a link from my site to yours

 

[Johnny™]

check this out for tax calculations and employment advice. its a real jargon buster and fairly useful for advice on these matters.

http://www.i-resign.com/uk/home/