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 :)
