Employed, then self employed contractor, what tax do i pay?

by **sammorey** on Fri Jul 03, 2009 11:36 pm

Hi,

I was made redundant towards the end of April this year and recieved a final pay cheque, I found another job where i was employed until the end of may. The company then decided to employ me as a self employed contractor, until the end of June. (This was a short term job) I have now finished at the company and have cashed my cheque and i am wondering what to put aside for tax and NIC. I read that you pay £2.40 a week + 8% of earnings over a certain amount when self employed. But i have only done this for one month. Do i pay for the rest of the year? bearing in mind i have payed NIC through my employment.

Earnings this yr excluding recent pay cheque - £2617.30
TAX - £307.40
N.I. EMPLOYEE - £76.56
N.I. EMPLOYER - £89.09
N.I. PAY - £1648.00

I cheque i have just chequed is for £1488, assume i will exeed the maximum tax free allowance, so tax rate will be 22%. Tax code 647L.

I will thank you in advance for your replies.

Regards

by **Peter D** on Sat Jul 04, 2009 9:04 am

Have you registered as self employed. You have 90 days from the start of self employment. There is a NI/Tax calculator on the HMRC web site. IT is 20% not 22%. Regards Peter

by **RAL** on Sat Jul 04, 2009 9:31 am

When working as a subcontractor did this company deduct any money from your pay?

by **sammorey** on Sat Jul 04, 2009 10:57 am

Hi,

Thanks for the replies

The company did not deduct any money from my pay, and i haven't registered as self employed yet.

The company changed my employment status to apparently save their NIC they would otherwise pay.

by **RAL** on Sat Jul 04, 2009 9:38 pm

Best for you is to contact your local tax office.

As you are no longer working as self employed and your earning is less than "small earning exception". Even if you register as self employed you could apply for exemption from paying class 2 nic (weekly £2.40)

HMRC may treat this "self-employed" income as other income and you may not have to pay Class 4 nic of 8%.

Also ring tax office and request self assessment form as you have tax chargeable income and you have to pay tax on it.

For the safe side I would kee about 30% of "self employement" income just incase.

Tax you have to pay is 20% on your gross income.

HTH