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Posted Tue, 03 Sep 2024 09:57:09 GMT by EH Pottery
Hello all, It's my first time filling out a self assessment form after setting up a small ceramics business last year. This year I'm closing in on going over my £1000 limit and will need to declare my income. As it's the first time, and my situation is a bit niche, I'm struggling to get confirmation on a few things and I was hoping to find some advice one here. - Currently my income streams are split into two. I make the majority of my extra income through my ceramics business, while I also top up my income doing online studies which makes smaller but not insignificant amount. Will I need to fill out two seperate self assessments? Or will they be grouped into one under me as someone self employed. - Because ceramics is a pretty cost heavy enterprise, and I'm really only starting out. My business expenses far outstrip my income. I believe my current costs vs income looks at about £1700 vs £800. I'll expect this to even out a bit over the Xmas period. But realistically my ceramics enterprise is never going to do more than break even, which is all I'm really aiming to do, and I'll expect to finish the year on a loss overall. How do expenses vs income work when it comes to taxation. If I have spent far more than I have earned, will I still be hit with a tax bill? - I'm also on full time PAYE for my main income, will this mean I have to submit differently, or will it affect my taxation overall? - Finally, do you have any advice on what is a good % of income to reserve to cover potential tax costs at the end of the year? The last thing I want to do is hit the new financial year and realise I've got a hefty bill that will bankrupt me! Thanks in advance for the help! There are quite a few things I'm trying to work out.
Posted Thu, 12 Sep 2024 07:25:22 GMT by HMRC Admin 25 Response
Hi EH Pottery,
This forum is for general queries only and is intended to help you self-serve.
We are unable to provide specific advice tailored to individual circumstances.
You may wish to contact our Self Assessment helpline or contact our webchat facility here:
Self Assessment: general enquiries
Thank you. 
 
Posted Thu, 12 Sep 2024 10:07:00 GMT by Sarah87
I can probably help you a bit with some of these! - Will I need to fill out two seperate self assessments? No, you don't fill out two assessments. When you get the form, you will see that there are spaces for you to declare each income stream (including your PAYE employer - more on that in a minute). - How do expenses vs income work when it comes to taxation. If I have spent far more than I have earned, will I still be hit with a tax bill? There is a space on the form where you declare your business expenses. These expenses are deducted from your taxable profit, so no, you won't pay tax if you've spent more than you've earned. https://www.gov.uk/expenses-if-youre-self-employed - I'm also on full time PAYE for my main income, will this mean I have to submit differently, or will it affect my taxation overall? No, you won't submit differently. You will have to declare your employment on the self assessment, and provide the numbers from your P60, but it won't affect taxation in itself. It *might* contribute to you moving into a higher tax bracket if your combined income is over £50k, or however much the threshold is now. - Finally, do you have any advice on what is a good % of income to reserve to cover potential tax costs at the end of the year? The last thing I want to do is hit the new financial year and realise I've got a hefty bill that will bankrupt me! Haha, I empathise with the fear! You can do a back-of-the-envelope calculation yourself by figuring out how much income you're likely to be taxed on, then calculating the relevant % of that. https://www.gov.uk/income-tax-rates Basically, you pay 20% tax on anything you earn over £12,571 up to £50,270 - but remember that you've already been taxed on some of your income through PAYE. Let's say for the sake of argument you earn £20000 per year with an employer. You pay 20% on everything over £12,571, so you pay 20% of £7429, which is £1485.80. Your employer should have managed that, so no worries there. Then let's say you earn another £1400 a year from your ceramics business, AFTER you've taken off expenses. You'll pay 20% on that, too, which is £280. So the actual tax bill you'll have to pay yourself, after you've submitted your Self Assessment, is £280. Another thing to bear in mind: your Self Assessment form will ask you if you *also* want to pay National Insurance Contributions on your self-employment income. As you already pay them through PAYE, you may choose not to, but that's up to you. For what it's worth, the form is quite helpful in terms of offering guidance on all the questions, so you'll probably find a lot of these questions get answered for you as you go. Good luck :)

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