Question for self employed people!!

[vwwinston72]

Hi, i've recently gone self employed as a carpenter and i want to know if im going about it properly, when i've done a job and get paid i have been deducting 20% from my labour charges and keeping it to one side until i do my tax return is that the right thing to do?

any help is muchly appreciated!

cheers!

 

[deluxedude]

thats what i do and usually have a bit left over after paying my tax so bonus !!
make sure you get a good accountant as they claim for everything (laundry,stationary etc)

 

[vwwinston72]

cool i thought it was the right thing to be doing but ringing the tax office is a minefield of automated questions and no real answers cheers for your reply! Puts my mind at ease abit now!

 

[Graham L]

Yes you should be well covered, your tax bill shouldn't be more than about 12-15% of your earnings if you claim back for everything you can, as suggested its worth getting an accountant and don't forget you can claim for tools etc bought up to 6 months of you starting up.

Just make sure you have registered with your tax office that you have gone self employed,

 

[vwwinston72]

cool i have registered with them just waiting to hear back, im defintiely gona use an accountant even though i know alot of people who do there own tax returns i dont really wana risk it!

cheers for your help people!

 

[Rosie]

That's what I do to, and if you do online banking you could transfer the 20% into an online only savings account, then at the end of the year it would have made you a little bit of interest too!

 

[rallye dale]

You need to sort your NI out aswell , you pay voluntry contributions monthly via direct debit

 

[matt-me]

If you do any work for building contractors or subbies, they have to verify you with HMRC and it is their responsibility to deduct the tax from your labour element, so show your labour separately from materials on any invoice. They must then pay this amount over to the HMRC on a monthly basis, and they should give you a periodic statement detailing how much they have deducted and paid over. You will need this statement to offsett against what you may have to pay over when you submit your tax return. It is important you get this statement in case they don't pay it over and something happens to them as i think you may still be liable.

To verify you, they will need your unique tax reference Nr (UTR nr) which HMRC should give you.

This is how it should work although i hear of people doing it wrong.

If you just work direct for businesses or householders then, as others have said, setting aside 20% should be more than enough.

I'm an MD for a small main contractor so we do this all the time and these are the rules.

Al

 

[sparkywig]

Just get paid in cash....

 

[choplee]

I'll 2nd that sparkywig ..lol

 

[strongy]

ye and the rest of us can pay your bit :roll:

 

[sparkywig]

You also need a sense of humour when self-employed.....

 

[simo]

You also need a sense of humour when self-employed.....

Not wrong there :shock:

I sub from a large company and they stop 20% before I get it, then get a smallish rebate each year :mrgreen:

As already said get a recommended accountant - they pay for themselves in the long run! Mine is about £400 per year but deals with everything!

Simo

 

[sparkywig]

You also need a sense of humour when self-employed.....

Not wrong there :shock:

I sub from a large company and they stop 20% before I get it, then get a smallish rebate each year :mrgreen:

As already said get a recommended accountant - they pay for themselves in the long run! Mine is about £400 per year but deals with everything!

Simo

Shop around for accountants and haggle over fees, don't let them charge you limited company rates if you're a sole trader.
The senior partner of a largish accountancy practice does my books, but he lives in the village and I've got mine down to £240.

 

[rallye dale]

And dont forget to put your Bus parts through as your motor expenses :msn4:

 

[scott wilson]

If you do any work for building contractors or subbies, they have to verify you with HMRC and it is their responsibility to deduct the tax from your labour element, so show your labour separately from materials on any invoice. They must then pay this amount over to the HMRC on a monthly basis, and they should give you a periodic statement detailing how much they have deducted and paid over. You will need this statement to offsett against what you may have to pay over when you submit your tax return. It is important you get this statement in case they don't pay it over and something happens to them as i think you may still be liable.

To verify you, they will need your unique tax reference Nr (UTR nr) which HMRC should give you.

This is how it should work although i hear of people doing it wrong.

If you just work direct for businesses or householders then, as others have said, setting aside 20% should be more than enough.

I'm an MD for a small main contractor so we do this all the time and these are the rules.

Al

as a self employed person with a UTR it is YOUR responsibility to disclaim what you have earned.....expect a final tax bill of £4k if you turnover 20K....as soon as you generate over 34k then the tax starts to change........GET AN ACCOUNTANT THAT YOU TRUST

 

[Pete B]

As well meaning as all the above advice is, I fear it may be rather overwhelming to someone new to the idea of self employment. My suggestion is to;
ask around locally for recomendations and get yourself a good and respected accountant.Tell the accountant that you do not know what to do and how the 'self employed thing' works. If they are any good they will calmly and carefully explain this to you. It really is not as scary or complicated as it at first seems. As a sole trader, the accountant should charge you at the very worst £500 at the end of the year (I'm a Ltd company so around £1200 :? ). They know what they are doing. They have a reputation with the local tax office and any dealing with the tax man looks so much better done via an accountant. The accountants cost is tax deductable (so will not actually cost you when the sums are done at the end of the year)
You will hear a lot of confusing and contradicting advice from workmates, bloke in the pub etc. Ignore them all and do what the accountant says. Bloke in the pub trained to be brick layer/train driver/plumber etc, your accountant trained to be an accountant, listen to the accountant.
As I keep saying, get a good accountant, it may cost a bit more but they will keep you on the straight and narrow and prevent any problems with the tax man. It's not hard given the right help, I've been doing it for years so it must be simple!!!!

 

[r73]

If you do any work for building contractors or subbies, they have to verify you with HMRC and it is their responsibility to deduct the tax from your labour element, so show your labour separately from materials on any invoice. They must then pay this amount over to the HMRC on a monthly basis, and they should give you a periodic statement detailing how much they have deducted and paid over. You will need this statement to offsett against what you may have to pay over when you submit your tax return. It is important you get this statement in case they don't pay it over and something happens to them as i think you may still be liable.

To verify you, they will need your unique tax reference Nr (UTR nr) which HMRC should give you.

This is how it should work although i hear of people doing it wrong.

If you just work direct for businesses or householders then, as others have said, setting aside 20% should be more than enough.

I'm an MD for a small main contractor so we do this all the time and these are the rules.

Al

as a self employed person with a UTR it is YOUR responsibility to disclaim what you have earned.....expect a final tax bill of £4k if you turnover 20K....as soon as you generate over 34k then the tax starts to change........GET AN ACCOUNTANT THAT YOU TRUST

I'd say you'd expect to pay circa 4k on a net income of 20k. Turnover is a bit different as this is your gross amount before deductions
Also be careful of VAT. Think the threshold is about 70k TURNOVER. If your supplying subby's and materials it's surprisingly easy to reach this. Again this is your responsibility.
All the best, being self employed does give you a bit more freedom 8)

 

[vwwinston72]

cheers for all the replys, i've took it all on board it definitely helps with getting my head round it all!

thanks again its all really appreciated!