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[Attila0413]

Hi there

As I recently moved in the UK, I'm still not sure about how to set up some stuff.

I'm currently planning to work as a freelance AND employed. I already have a NINo.

Now, some questions:

- Do I need to register a business to be self-employed?
- How much taxes am I going to pay approximately?
- Is there a threshold before starting paying taxes? Let's say, under 3000 p/y I don't pay anything.
- Let's say I'm going to earn nothing for a year. I'm not going to pay any taxes for that year?
- Do I need to register VAT?
- The service I'm looking for is "Self Assessment (SA) for self-employed/sole traders (including Class 2 National Insurance contributions)", right?
- Pitfalls to avoid?

Also, since here residency seems to work in a different way from Italy, can I declare to be resident in the UK? I share a home with other people, I came here on May.

Sorry if some questions may seem trivial, but I just want to make sure I don't make any mistakes

[Oddball]

You don't have to register a business, but you do need to tell hmrc that you are self employed. You can do that at the hmrc website. This does mean that you'll need to do a tax self assessment each year.

You can earn £8,000 before having to pay income tax, but there may be other payments that need to be paid, national insurance, etc. the income tax threshold is increasing to £10,000 soon, but I forget exactly when. If you earn nothing or make a loss in a year you won't pay any income tax, and if you claim small earning exception you can also avoid paying some other taxes like nat. insurance.

VAT is a real pain so only register for VAT if your gross turnover for the year will go over the threshold. The threshold changes each year, and the 2012-2013 threshold is £77,000 I think. If you're earning that kind of money then get an accountant.

Yep, sole trader is the one you're after.

[Attila0413]

You don't have to register a business, but you do need to tell hmrc that you are self employed. You can do that at the hmrc website. This does mean that you'll need to do a tax self assessment each year.

You can earn £8,000 before having to pay income tax, but there may be other payments that need to be paid, national insurance, etc. the income tax threshold is increasing to £10,000 soon, but I forget exactly when. If you earn nothing or make a loss in a year you won't pay any income tax, and if you claim small earning exception you can also avoid paying some other taxes like nat. insurance.

VAT is a real pain so only register for VAT if your gross turnover for the year will go over the threshold. The threshold changes each year, and the 2012-2013 threshold is £77,000 I think. If you're earning that kind of money then get an accountant.

Yep, sole trader is the one you're after.

Thanks for the answer

Ok, it's clearer now. I'm not planning to earn that much at the moment, so I don't need VAT for now.

How much would be National insurance tax while under the threshold?

Also, since I'll likely be employed at the same time, how can I calculate taxes? Self-employed and employed incomes are separate, right?

[Oddball]

Both employed and self employed income count towards your income tax payment. You still have to do a self assessment, but it's all pretty straight forward if your employer isn't dodgy. You'll probably be required to pay class 2 and 4 nat. insurance, but as you are an EU resident working in the UK I could be wrong. I don't know how much your nat. insurance will be as some is a fixed amount and some is based on your income. They just send me a bill every quarter and I go and pay it.

I should add that this is how I understand things to be. I'm no expert, and I'm not ruling out the possibility that I've got some of that wrong.

[Chris Koźmik]

Both employed and self employed income count towards your income tax payment.

Note that while income tax is based on income from ALL sources (employed + self employed + everything else), VAT thereshold is based only on your self employed part (the income volume of your "company").

Note 2: In English the words income and profit are messed up, you actually pay no income tax but profit tax (income minus expenses is the base of the tax), but the VAT thereshold is based on sales volume (income, regardless of expenses).

Note 3: You don't need to reregister your business if you moved to UK, as EU citizen you are allowed to own/run a company in any EU country (so you can still be registered in Italy). But probably switching to your place of residence would be more convenient to you.

[James Coote]

Also check out http://www.businesslink.gov.uk/, the government's website with all the information on what you need to set up a business.

[Attila0413]

Thanks for the replies.

Well, I'm still a bit confused. I thought my employer was responsible for calculating and paying taxes and everything else related to my job with him, and then I would receive the net amount. Is that right?