How to work it out?

[Kirsty90]

I'm starting to worry about my tax bill already. How can I work out how much ill pay? Between April & August last year I was doing childminding part time & still working in an office. My accounts sheet is up to date & I have my p45 from my ex employer for the months I was working both jobs. How will tax & NI class 4 be worked out on these 2 figures?

Thanks x

[cathtee]

Hi Assuming you have told the tax office you are now self employed you can go onto the website and register to do your tax return on
line and when you file your return at the very end it will work out you NI payment and the amount of tax you owe.

[hectors house]

Just enter the figures on your tax return if you have a paper one or on-line if you have chosen to submit your return that way - think you need to apply for a Government gateway password. I still do mine the old fashioned paper way - but have a short version that is really easy to fill in. If you are worried about a big tax bill you could start to put in a savings account 25% of your earnings - I'm sure it won't be that much as you will have already paid tax and NI on your wages from when you were employed - so you just owe on the childminding income.

[Kirsty90]

I am already registered as self employed & I filled in a self assessment last year. I have got some money put aside but I am just worried that it may not be enough & I am due to go on maternity leave at the end of this month so will not be earning enough to put any more towards what I have already put away. I was just wondering if there is a calculator/a calculation I can use to get a rough idea of a figure to expect? X

[bunyip]

I am already registered as self employed & I filled in a self assessment last year. I have got some money put aside but I am just worried that it may not be enough & I am due to go on maternity leave at the end of this month so will not be earning enough to put any more towards what I have already put away. I was just wondering if there is a calculator/a calculation I can use to get a rough idea of a figure to expect? X

HMRC have an online calculator which may help you to estimate how much to put aside:

HM Revenue & Customs: Self-employed ready reckoner introduction (http://www.hmrc.gov.uk/tools/sa-ready-reckoner/index.htm)

There's also a pdf version available on Simplified Accounting Limited - Home (http://www.simplified-accounting.co.uk) . I can't copy it as a link - it goes straight to the pdf. If you enter "hmrc budgeting for your first self employed" into a Google search, you'll find it on the first page of results.

Not sure how the calculations will be affected by maternity leave and part-time office work, though. Might be worth a call to HMRC helpline.

Hope this helps. :)

[MrAnchovy]

Those calculators won't help if you have employed income as well, and the tax return for 2012/13 isn't available yet to fill in.

It's not hard to work it out yourself:

1. Work out your profit from childminding (total income less total expenses, includinga wear and ear allowance, less annual investment allowance or other capital allowances).

2. Take £7,605 off the profit figure in 1. If this figure is more than £0, multiply it by 0.9 to get the amount of Class 4 National Insurance due.

3. Make sure the P45s are for this tax year (i.e. after 5th April). Find the "total pay in this employment" figures on your P45s. Add these figures to the profit from 1. Add on any other income e.g. savings and deduct things like pension contributions paid gross, gift aid etc if you have any.

4. Take £8,105 off the adjusted net income figure in 3. If this figure is more than £0, multiply it by 0.2 to get the amount of basic rate income tax due.

5. Find the "total tax in this employment" figures on your P45s - this is what HMRC have already collected through PAYE.

6. Add the figures in 2 and 4 and take off the figure in 5.

7. If you have already paid any amounts "on account" for 2012/3 take this off the amount in 6, otherwise just take the amount from 6. This is the amount that needs to be paid by 31 Jan 2014.

7. If the amount in 6 is more than £1,000 multiply it by 0.5. You will also have to pay this amount by 31 Jan 2014 and again by 31 Jul 2014 on account of your liability for 2013/4.

[Kirsty90]

Thank you for that. The calculation for working out NI class 4 is that correct? Or would it be multiply by 0.09 to get the 9%?

[MrAnchovy]

Thank you for that. The calculation for working out NI class 4 is that correct? Or would it be multiply by 0.09 to get the 9%?

Oops, thanks for pointing that out - 90% NI would be rather a lot!

[MessybutHappy]

Thanks for this,,really useful info.