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    I don't get it say you earned 20k for the year then after you declare it they send you a letter telling you how much you have to pay in tax how will you then pay it seeing though throughout the year you have spent the money and didn't know how much tax you would need to pay...? are you meant to just get your money at the end of the week and guess how much tax you will pay then save the money?

    Also do you need an accountant? or is it simple enough to do yourself?

    Do you need to send them like bank statements and proof of earrings? as anyone could say they earned a £1 when infact they earned £10,000
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    National Insurance Contributions are £2.50 a week (It might be £2.61, you'll need to check). This is paid 6 monthly or annually I think. So times the NI contribution by 52 and that's how much you need to put a side for that.

    The only other tax is the income tax which is 20% on any earnings over the threshold (again, you'll need to check what that figure is). So generally if you put about 20% of your earnings in the bank not to be touched, you'll be fine.

    No, you don't need an accountant as a sole trader.

    No you don't need proof, but if they want to investigate you, you'll need to show them proof (which is why some people prefer to use a separate bank a/c if they are a sole trader.)

    You could say you earned £1, but that's fraud and most people's ethics stop them from doing that.
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    (Original post by Runninground)
    National Insurance Contributions are £2.50 a week (It might be £2.61, you'll need to check). This is paid 6 monthly or annually I think. So times the NI contribution by 52 and that's how much you need to put a side for that.

    The only other tax is the income tax which is 20% on any earnings over the threshold (again, you'll need to check what that figure is). So generally if you put about 20% of your earnings in the bank not to be touched, you'll be fine.

    No, you don't need an accountant as a sole trader.

    No you don't need proof, but if they want to investigate you, you'll need to show them proof (which is why some people prefer to use a separate bank a/c if they are a sole trader.)

    You could say you earned £1, but that's fraud and most people's ethics stop them from doing that.
    Thanks yeah I agree I think its better to pay the right amount and be 100% legit I will checkup on the figures but now I have a rough idea of what I'm doing so thanks very much. Just a shame I'm going to lose alot of money as my income is roughly 450-500 a week so the tax man will love me.
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    (Original post by Skeppy)
    Thanks yeah I agree I think its better to pay the right amount and be 100% legit I will checkup on the figures but now I have a rough idea of what I'm doing so thanks very much. Just a shame I'm going to lose alot of money as my income is roughly 450-500 a week so the tax man will love me.
    That's about £26k a year so you shouldn't be paying any more than you would if you were employed by someone at a salary of £26k.

    Can I ask what you do?
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    I am self employed, and pay NI twice a year and tax yearly. You just have to get into the habit of putting money aside, and don't spend it. I place money in my ISA for tax payments, and find that it works well for me because I can actually earn a fair bit of interest over the course of the year, so it effective puts you as better off than someone who just got it taken out of their earnings- although I have to pay the same amount I can at least earn a little interest on it before it is paid.
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    There are two classes of NI contributions. The basic one is 2.50/week but then there are Class IV (?) contributions which are related to how much you earn. Putting aside 28% of your income to cover income tax + NI contributions is advisable.
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    (Original post by xoxAngel_Kxox)
    I am self employed, and pay NI twice a year and tax yearly. You just have to get into the habit of putting money aside, and don't spend it. I place money in my ISA for tax payments, and find that it works well for me because I can actually earn a fair bit of interest over the course of the year, so it effective puts you as better off than someone who just got it taken out of their earnings- although I have to pay the same amount I can at least earn a little interest on it before it is paid.
    Good advice. I will have to bear that in mind.
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    (Original post by TheMagicRat)
    Good advice. I will have to bear that in mind.
    It's definitely good to be prepared! A tax bill of several thousand pounds is not something you want sprung on you if you haven't saved for it.
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    (Original post by Thomas2)
    There are two classes of NI contributions. The basic one is 2.50/week but then there are Class IV (?) contributions which are related to how much you earn. Putting aside 28% of your income to cover income tax + NI contributions is advisable.
    28% flippin hell

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    (Original post by Skeppy)
    28% flippin hell

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    Yeah, self-employed people have to pay higher NI contributions than employed people because employers pay some of employed persons' NI contributions. You still get the tax free allowance though which is going to be 10k as of next year.
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    And then when you get to £70k ish you have to start paying VAT, which is an extra 20% (You either take the hit or you charge your customers more)
 
 
 
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