Payments of Tax, NI and student loan when self employed

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Hi all ,

New here and sorry if this has been asked before but I’m going to be setting up as self employed shortly with some work from home jobs (think Appen , Crisp thinking etc) and was wondering what happens when it gets to paying the tax , NI and student loan ( which I assume I would be liable for on extra earnings too?)

I already have a part time job so anything earned would be taxable but I’m starting to wonder how I go about with paying the tax etc and at what rate? Do I save 32.5% monthly and then pay it all at the end? How do I find out how much student loan I would need to pay on my earnings( as I already have student loan deductions from my main job) also what if this pushes me over the threshold into higher tax band (unlikely but I’m not actually sure how much I could earn from Appen or crisp etc )

How much do people come out with from the likes of Appen for approx 20hours work a week?

Am I over thinking things?

Sorry it’s a long one for my first question!

Thanks in advance
 

Jon

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Hi all ,

New here and sorry if this has been asked before but I’m going to be setting up as self employed shortly with some work from home jobs (think Appen , Crisp thinking etc) and was wondering what happens when it gets to paying the tax , NI and student loan ( which I assume I would be liable for on extra earnings too?)

I already have a part time job so anything earned would be taxable but I’m starting to wonder how I go about with paying the tax etc and at what rate? Do I save 32.5% monthly and then pay it all at the end? How do I find out how much student loan I would need to pay on my earnings( as I already have student loan deductions from my main job) also what if this pushes me over the threshold into higher tax band (unlikely but I’m not actually sure how much I could earn from Appen or crisp etc )

How much do people come out with from the likes of Appen for approx 20hours work a week?

Am I over thinking things?

Sorry it’s a long one for my first question!

Thanks in advance
Hey there

So to answer your last question first. If it’s web search evaluator work then you should be looking to make around £600 a month

I used to work full time until January of this year and earned money on the side via Matched Betting and blogging (with the latter being taxable)

All you do is come April 2020 is you can login to self assessment and submit how much you have earned. You will then have until January 2021 to pay it all (tax, ni, student loans etc)

Don’t forget to claim for all allowable expenses - I recommend using FreeAgent which is what I use. You can claim it as an expense and even submit your return directly to HMRC through it

 
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Thank you for your reply .

So I could be looking at £7200 pa for each additional job I take on .
Hmmm starting to worry it will push me into the next tax bracket (if I have 2 x positions at different companies) as I also work bank shifts at work and now my children are a little older I can work more shifts so effectively could end up with several income streams .

Starting to wonder that it may not be worth it as paying a 40% tax on it and also loosing child benefit etc could leave me with very little to show for the extra effort . But then I’ve never really earned enough to actually know what being in the next tax bracket means!)

I could also end up owing significant student loan repayments and it all seems very complicated

Even though I’m cash rich on paper I have significant debts I want to get rid of so was hoping that this would be a means to an end but now I’m not too sure .

Never thought I would be in the position of worrying about earning too much money!
 

Jon

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Thank you for your reply .

So I could be looking at £7200 pa for each additional job I take on .
Hmmm starting to worry it will push me into the next tax bracket (if I have 2 x positions at different companies) as I also work bank shifts at work and now my children are a little older I can work more shifts so effectively could end up with several income streams .

Starting to wonder that it may not be worth it as paying a 40% tax on it and also loosing child benefit etc could leave me with very little to show for the extra effort . But then I’ve never really earned enough to actually know what being in the next tax bracket means!)

I could also end up owing significant student loan repayments and it all seems very complicated

Even though I’m cash rich on paper I have significant debts I want to get rid of so was hoping that this would be a means to an end but now I’m not too sure .

Never thought I would be in the position of worrying about earning too much money!
Yeah I mean think about it this way

You earn £30k and pay the 20% rate - £6000 in tax

You earn £50k and pay the 40% rate - £20k in tax

The top you’ve left with £24,000 and the bottom you are left with £30,000 so you’ve still made more money even though you’re in the higher tax earnings

Like I said above, this is why claiming for all the expenses you can is important so you keep that taxable amount to be as low as it can be
 
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Ah right I see what you mean.

What kind of expenses would I be able to claim for?

Sorry for all the questions! Very new to all this !
 

Jon

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Ah right I see what you mean.

What kind of expenses would I be able to claim for?

Sorry for all the questions! Very new to all this !
All sorts


 

savvysaver

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You're only taxed at the higher rate on your income over £50k is my understanding.

So you'd pay no tax on your personal allowance, 20% on income between your personal allowance and 50k and 40% on income over 50k. So basically if your earnings cross over 50k, that doesn't mean you pay 40% on your whole income all of a sudden. That's not including NI, etc, obviously.
 
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oh right so for example :

My standard Job earns £25000 pa (estimated )
My additional bank contract earns £18500 pa (estimated dependant upon hours worked I only work part time with my standard role)
Then I earn an additional £14400 from WOH jobs as self employed (estimated again)

I would only pay the 40% on the £7900 over the £50000?

Actually I pay 9.3% pension on both the standard and bank contract jobs so that would reduce my taxable income a bit but I think I may still end up over the threshold for 40% tax which would also mean I would need to repay child benefit at a rate of 1% for every £100 I earn over £50k so £841per year of child benefit (I just used the calculator on the HMRC website to estimate this ) Based on post tax earnings of roughly £53343 pa

Im starting to understand this a bit more now

thanks for all your help!
 

savvysaver

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Yes, you'd pay no income tax on £12500, 20% on the amount between £12500 and £50000 (£7500) and 40% on the £7900 over £50000 (£3160). Things work a little differently if you're lucky enough to earn over £100k and obviously none of that is including NI, etc. You can use an income tax calculator online and put some different scenarios in to see how much of a difference it would make.

I don't know anything about child benefit though, sorry about that. If it makes sense to, you could increase your pension contributions to bring it below the threshold for there being problems with child benefit though.
 

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