This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

1st time tax return as self employed

gregzilla
Posts:1
Joined:Mon Apr 12, 2021 9:37 am
1st time tax return as self employed

Postby gregzilla » Mon Apr 12, 2021 10:08 am

Hi, I work full time but last April I also started working freelance as a side hustle. Just going to very simply break down my situation. I pay tax class 2 by direct debit and national employment contributions are sourced from my full time work salary. I have funds put aside for any end of year tax class 4 contributions.

Let's say each month I earned £500 as self-employed.
Paid £30 tax class 2 each month.
Paid myself £350 each month.
Let's say business expenses for the tax year is £1000 (computer equipment)

So, would:

Turnover be 12x£500 = £6,000
Gross profit be £6,000-£1,000 (expenses) = £5,000
Net profit be £6,000 - £1,000 (expenses) - £360 (class 2) = £4,640*
OR Net profit, same as above but also deduct my salary - £4,640 - £4,200 = £440
????

* And this figure is what the tax office will use to determine how much I owe (tax class 4) after submitting my return?

BTW, I'm based in the Isle of Man, if that makes any difference. The self employed tax rate in IOM is 0% for up to £7,176, and 8% for over that amount.

Sorry for the very basic questions here, I kind of know what to expect but would be good to have someone confirm for me. Thanks

pawncob
Posts:4652
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: 1st time tax return as self employed

Postby pawncob » Mon Apr 12, 2021 4:47 pm

NICs are not deductible aginst profits.
Drawings are not deductible against profits, they are on account of profits.
With a pinch of salt take what I say, but don't exceed your RDA


Return to “Income Tax”

cron