Every individual who is self-employed has to complete a self-assessment tax return whether they are a self-employed window cleaner to a mini cab driver to the owner of a large corporation.
Why stress yourself out with wondering if the items that you are claiming back as expenses are actually allowed under hmrc's guidance? Why not come and have a free consultation with us where we can discuss everything through with you and if you choose to work with us we can complete your tax return on your behalf and provide you with a set of accounts within a small time frame.
The income tax rates for a self-employed person in the UK are the same as an employee’s with the rates from April 2017 being listed below:
Self-Employed people still have to pay national insurance contributions although this is a lower rate compared to employed people the rates for this from April 2017 are listed below:
Mr G earned a self-employed income of £55,000 and had £20,000 of allowable expenses his calculation would be as below
Net Profit: £35,000
Therefore Mr G would not be a higher rate tax payer and would only need to pay basic rate taxation, class 2 and class 4 national insurance contributions, his tax calculation would is shown below:
Mr G's total tax liability for the year (2017/2018) would be £7,263.44 of which HMRC will also ask for a 50% prepayment for the following tax year in both January (2019) of the year after and July (2019) therefore Mr G would need to pay £10,895.16 to HMRC by 31/01/2019 to avoid any late payment penalties.