eBay business and a PAYE job
Discussion
I have been looking at selling things on eBay as an extra source of income and I will need to register as a business on there as well as companies house. I am really stuck on how to go about setting it all up. Have a full time job which the basic will leave me jus under the 40% tax bracket, I need to know how this will affect my taxes etc.
any pointers would be greatly appreciated
any pointers would be greatly appreciated
You only need to register at Companies House if you intend to set up as a limited company. Unless you intend to trade at a level of tens of thousands of pounds, I would suggest that you do not need to set up a limited company. You can trade in your own name i.e. as a sole trader.
There is no need to "register" with any government organisation when trading as a small sole trader. HOWEVER, you do need to notify HMRC that you have started trading and they will issue you with a self assessment tax reference so that you can eventually submit your income details to them on a s elf assessment tax return (and pay any Income Tax and National Insurance due).
Obviously, if the business grows you MIGHT have to register with HMRC for VAT and if you took on staff you would also have to register for PAYE - but I doubt that would be necessary in your case.
There is no need to "register" with any government organisation when trading as a small sole trader. HOWEVER, you do need to notify HMRC that you have started trading and they will issue you with a self assessment tax reference so that you can eventually submit your income details to them on a s elf assessment tax return (and pay any Income Tax and National Insurance due).
Obviously, if the business grows you MIGHT have to register with HMRC for VAT and if you took on staff you would also have to register for PAYE - but I doubt that would be necessary in your case.
tilley441 said:
thanks for the responses, think I will go the sole trader route. I will call HMRC to ask about how it will affect my "normal" jobs wage.
It shouldn't affect you salary and the tax arising at all.The way it works is -
Salary - continues to be taxed under the PAYE system in the normal way. Your annual tax allowance will continue to be allocated to your salary as your PAYE Coding (as it should already be) and therefore the PAYE situation remains the same.
When you eventually submit your annual tax return, any taxable profits arising from your self employed activity will be taxed separately under the self assessment system and you will be asked to pay this tax as a separate exercise on or just before the 31 January following the end of the tax year.
As an example - if you started sole trading now, the first self assessment tax return you will need to complete will be for tax year 2016/17.
HMRC will send you a letter just after 5 April 2017 telling you of your requirement to complete this return.
The return will need to be submitted by 31 January 2018 at the latest. If there is any tax arising on your self employed activity, this is also payable in full by 31 January 2018.
HMRC does provide options to allow self employed tax to be collected through the PAYE system. At the moment, this is an option which ONLY THE TAXPAYER CAN EXERCISE. In my experience, collecting self assessment tax through PAYE Codings causes confusion and can create problems with HMRC making mistakes with your PAYE tax code. So I never exercise this option for my clients.
HOWEVER, when Making Tax Digital comes in on 6 April 2018, I think HMRC will oblige people to do this - so effectively they will be removing the choice from the taxpayer.
Eric Mc said:
It shouldn't affect you salary and the tax arising at all.
The way it works is -
Salary - continues to be taxed under the PAYE system in the normal way. Your annual tax allowance will continue to be allocated to your salary as your PAYE Coding (as it should already be) and therefore the PAYE situation remains the same.
When you eventually submit your annual tax return, any taxable profits arising from your self employed activity will be taxed separately under the self assessment system and you will be asked to pay this tax as a separate exercise on or just before the 31 January following the end of the tax year.
As an example - if you started sole trading now, the first self assessment tax return you will need to complete will be for tax year 2016/17.
HMRC will send you a letter just after 5 April 2017 telling you of your requirement to complete this return.
The return will need to be submitted by 31 January 2018 at the latest. If there is any tax arising on your self employed activity, this is also payable in full by 31 January 2018.
HMRC does provide options to allow self employed tax to be collected through the PAYE system. At the moment, this is an option which ONLY THE TAXPAYER CAN EXERCISE. In my experience, collecting self assessment tax through PAYE Codings causes confusion and can create problems with HMRC making mistakes with your PAYE tax code. So I never exercise this option for my clients.
HOWEVER, when Making Tax Digital comes in on 6 April 2018, I think HMRC will oblige people to do this - so effectively they will be removing the choice from the taxpayer.
That is the best explanation I have had so far. Thank you I don't know why they make it such hard work to find anything on the HMRC site.The way it works is -
Salary - continues to be taxed under the PAYE system in the normal way. Your annual tax allowance will continue to be allocated to your salary as your PAYE Coding (as it should already be) and therefore the PAYE situation remains the same.
When you eventually submit your annual tax return, any taxable profits arising from your self employed activity will be taxed separately under the self assessment system and you will be asked to pay this tax as a separate exercise on or just before the 31 January following the end of the tax year.
As an example - if you started sole trading now, the first self assessment tax return you will need to complete will be for tax year 2016/17.
HMRC will send you a letter just after 5 April 2017 telling you of your requirement to complete this return.
The return will need to be submitted by 31 January 2018 at the latest. If there is any tax arising on your self employed activity, this is also payable in full by 31 January 2018.
HMRC does provide options to allow self employed tax to be collected through the PAYE system. At the moment, this is an option which ONLY THE TAXPAYER CAN EXERCISE. In my experience, collecting self assessment tax through PAYE Codings causes confusion and can create problems with HMRC making mistakes with your PAYE tax code. So I never exercise this option for my clients.
HOWEVER, when Making Tax Digital comes in on 6 April 2018, I think HMRC will oblige people to do this - so effectively they will be removing the choice from the taxpayer.
all the pages I looked at just seemed to link to another page which in turn had more links to click, I had about 15 pages open at one point. I even phoned them and all they could do was refer me to the website. I was only trying to find out if its worth running with the idea or if I would get hammered on taxes etc.
Just a quick check if I am right, if I am paying the 40% tax through my PAYE earnings I will also pay 40% on the sole trader tax?
Just a quick check if I am right, if I am paying the 40% tax through my PAYE earnings I will also pay 40% on the sole trader tax?
Indeed you will - assumimg you are making profits, of course. You only pay tax on Self Employed profits. If, for any reason, you make a self employed loss, you can actually use that loss to get some of your PAYE tax back.
And a loss can be created or augmented by judicious use of Capital Allowance claims - such as purchasing business related assets (computers, desks, commercial vehicles etc).
Self Employed individuals also pay Class 4 NI on their business profits - so be aware of that too.
And a loss can be created or augmented by judicious use of Capital Allowance claims - such as purchasing business related assets (computers, desks, commercial vehicles etc).
Self Employed individuals also pay Class 4 NI on their business profits - so be aware of that too.
I wouldn't set up a company purely for that reason.
I would expect that early self employed trading might very well create taxable losses (especially after claiming Capital Allowances as explained above). In that case, staying as a sole trader is far more beneficial as you could use your trading loss to get back some of the 40% tax you have already paid under PAYE.
I would expect that early self employed trading might very well create taxable losses (especially after claiming Capital Allowances as explained above). In that case, staying as a sole trader is far more beneficial as you could use your trading loss to get back some of the 40% tax you have already paid under PAYE.
tilley441 said:
Eric Mc said:
Self Employed individuals also pay Class 4 NI on their business profits - so be aware of that too.
yes I did read something about that, think it was 9% from what I rememberGassing Station | Business | Top of Page | What's New | My Stuff