self employed and now become employed. advice please

[fenwick458]

since september 2010 i have been self employed, subcontracting as a labourer under the CIS scheme. so have been paying 20% tax all year despite only earning 10k gross with 2k expenses so will be due about £1600 back in april when i do my return

I have now been offered a job and it will be employed. when i begin to get paid how much tax will i be paying? will i be taxed the full 20% and 12% class 1 NI before I even get my pay? i don't really understand tax codes, is a tax code where they basically figure out your annual gross income, deduct the personal allowance and then divide that amount by 12 and take a bit each month?

can i stay registered self employed incase i get the opportunity to do some work on the side? and i suppose i have to keep paying class 2 NI and filling out self assessment every year whilst I am self employed?
and whats the line on claiming business expenses for being self employed , even if i may only get 2 jobs per year.

thanks in advance

[mullet]

I have now been offered a job and it will be employed. when i begin to get paid how much tax will i be paying? will i be taxed the full 20% and 12% class 1 NI before I even get my pay? i don't really understand tax codes, is a tax code where they basically figure out your annual gross income, deduct the personal allowance and then divide that amount by 12 and take a bit each month?

They should put you on the "emergency" tax code, whereby you will receive 1/12 or 1/52 of your tax free allowance each pay period and then pay 20% tax on the rest of the income. Class 1 NIC arises on a week by week or month by month basis.

can i stay registered self employed incase i get the opportunity to do some work on the side? and i suppose i have to keep paying class 2 NI and filling out self assessment every year whilst I am self employed?
and whats the line on claiming business expenses for being self employed , even if i may only get 2 jobs per year.

Yes, you can stay registered self employed ... and the Class 2 NICs won't be much of a burden anyway. And yes you will have to continue to complete self assessment returns - remember that you should complete both employment and self employment pages, as the return should show all sources of income.

Business expenses - claim whatever is incurred wholly and exclusively for the purposes of the trade and make just/reasonable apportionments. If you currently claim some annual costs such as vehicle tax/insurance, vehicle capital allowances etc just time apportion them by the number of weeks of self employment if (say) you do a few whole weeks of self employed work each year. But if you do odd jobs here and there, apportion by days. As I say, just and reasonable is the key - it needs to be a fair amount for you to claim, and you need to be able to defend it if necessary.

[robbob]

When you start your new job your employer will give you a P46

On this form you have a multiple choice set of options - option A is as follows.

A – This is my first job since last 6 April and I have not been receiving taxable Jobseeker's Allowance, Employment and Support Allowance or taxable Incapacity Benefit or a state or occupational pension.

Providing the criteria mentioned are not applicable - I.e you can answer yes to this question, then tick box A and your employers should issue with a cumulative tax code rather than a w1/m1 code.This means on your first salary payment you will be allowed the YTD proportion of the personal allowance in full (approx £5600 minimum) before any tax is deducted.

and i suppose i have to keep paying class 2 NI and filling out self assessment every year whilst I am self employed

Providing your self employed earnings will be below approx £5k per year then you can apply for an exception from paying the class2 NI. Presuming you will be paying NI as an employee so it is probable that there will not be any added benefit in paying the self employed class2 if you do not need to - Employees who qualify for stamp get more generous benefits than the self employed.However the rules are quite technical and i would recommend doing some checks before you apply for the exception just in case this is not the case.
Link to CWF10 if you want to apply for exception
http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=yKpjabZqCc8&formId=433
Details of what benefits you qualify for when you pay class2
http://www.hmrc.gov.uk/working/intro/class2.htm

[fenwick458]

thanks. that clears it up a bit