Thread: Tax question

Any business has a £60K threshold before compulsory VAT registration. That business can be self-employed or limited company.

Remember that if self-employed there is the Income Tax/NI issues as well.

VAT is based on the business revenue, so that means the income received your from business activities, this includes being self employed or a sole trader but not other PAYE income.

As regards employment, it's quite possible to take multiple streams of income, however if you do, you may well require to complete a self assessment at year end, to tie up all your income received and employed (PAYE) tax paid, to work out if you need to pay any extra tax (or rebate!).

All as I understand it, I'm not an accountant.

So of course you should take advice from an accountant, and spend some time to find a really good one that you're comfortable with.

You *would* need to register as self-employed and fill out a tax return each year. That's really all there is to it as far as tax is concerned.

There is no tax threshold on your second income so you'll pay tax on every penny.

HTH. Good luck in your venture .

Probably best to have a meeting with your bank manager or accountant to go through the fine details.

I hear Mr Tax man isn't very nice if you owe him dosh.

My Advice, stick to your day job.

there are too many part timers in this industry as it is, and it's about to get infinitely tougher once the next round of Redbus price rises hit suppliers..

Unless you have a VERY GOOD USP, you will ONLY be able to compete on price (as you will have no reputation, and as part timers you won't be able to offer the service either) and anyone who competes on price alone will go the way of the dodo in 2007.

Sorry to be blunt, but it's best to be realistic.

J

Yes i will be booking an appiontment with the bank manager i think, got a few questions for him.

So from what i understand from this is that i need to sign up as self employed even though i am still working a full time job and as it is my second income i will get taxed on the very first £1.00 the business makes?

EDIT:

Sorry just read jamies' post.

I didn't say the business would be a GSP might not be at all, and like i said yes it would be part time whilst we find our footing then hopefully move on from there. We see this as the only way unless your willing to invest thousands upfront.

Originally Posted by eddie

Yes i will be booking an appiontment with the bank manager i think, got a few questions for him.

So from what i understand from this is that i need to sign up as self employed even though i am still working a full time job and as it is my second income i will get taxed on the very first £1.00 the business makes?

Yes, exactly.

Originally Posted by eddie

Yes i will be booking an appiontment with the bank manager i think, got a few questions for him.

So from what i understand from this is that i need to sign up as self employed even though i am still working a full time job and as it is my second income i will get taxed on the very first £1.00 the business makes?

You should also look into the various liability insurances you will require if you plan on taking customers kit / performing works for customers.. especially if you're a sole trader, as it's you personally they will Sue, without the pseudo protection of the Veil of Incorporation.

That said, good luck with it.

J

If you're running the business as Eddie Trading As XXXXXXXX then yes you'll need to register as self employed. You'll complete an SA tax return Self employment page each year. There will be NI and Vat issues to consider depending on your earnings.

If you're going to go down the 'safe' route and start a limited company then the company will be paying you a salary and dividends so you'd be an employee of the company and would need to complete a 2nd Employment page of your SA return. You'd also need to set up a PAYE scheme with HMRC to be able to pay yourself properly.

There are lots of issues to think about, your local Business Link would be a good place to start as Accountants can be expensive (I should know, I am one!)

Unrelated to VAT but

Hosting business sole trader = not a good idea, well in my view.

Go for Ltd gives you more protection.

Originally Posted by JamieD

you can buy business type things through your business and write off the VAT instead of paying yourself and then buying it.

"business type" things don't exist. Either it's for your personal use or it's for business use.

If it's for business use then it's valid to reclaim vat and allow it against tax.

If it's for personal use and you claim the vat back as well as claiming it as a business expense then thats a P11D benefit in kind and you'll be clobered for paye and NI.

You're taling about something which is commonly done but is strictly against the law. If you get a HMRC inspection and you can't justify the expenditure, oops.

Originally Posted by JamieD

There was nothing about doing both, in the end I decided it was best to setup a Ltd. company as I could then pay less tax and write off more expenses

Personally I think that's a bit of a myth and you'll just end up paying taxes in other ways.

Originally Posted by JamieD

That's not strictly true, for instance, if you work from home and have a room in your house that you use as an office you can claim part of the rent, heating, electric, phone bills etc. as a business expense. There are many other things that fall under this category too cars and travel for instance.

If you do this then strictly speaking you'll have to expense business insurance for both home and car if you start using them for non-business activities.