Self assesment confusion

Jack

I registered my businesses' start date as 01/03/21. In March, I only made £300 gross income. I am also employed PAYE on a part time basis. Can anyone tell me what that means in terms of filing a self assesment at the end of January 2022? I have registered for Self Assesment today but I'm now thinking perhaps it was too soon? The reason for doing so is that I've since made more than £1000 in gross income between the tax year Apr21 - Apr22.

Should I continue to put tax away to account for my Jan 2023 self assesment? Or am I confusing things? Thanks in advance!

TomFromCrunch

Hey Jack! Congrats on the new business. Don’t panic, this stuff can be confusing but every self-employed worker goes through it, and it all gets a bit easier to understand in time!

In the 2020/21 tax year running from (April 5th 2020 to April 4th 2021) you didn't earn enough for that additional Sole Trade income to be taxable (under £1000), but as you’ve registered for Self Assessment, it’s worth getting in touch with HMRC to clarify the situation with them. The Self Assessment line is 0300 200 3310 -to give you peace of mind they should be able to make a note on your account if they do tell you it isn’t worth filing.

With regards to the 21/22 tax year - you’ll need to pay tax on your Sole Trade income for this year by 31st January 2022.

You mention putting tax away for the payment due in January 2023 - doing this each month is a very good habit to get into and this’ll make it a lot less painful when it leaves the bank account!

Crunch’s Tax Estimator can help you with this - you can include your employment income and tax deducted at source and start adding your Sole Trade income and expenses as well.

If you’re using our Crunch Free software, for an extra fee we’re introducing an add on for 21/22, which would be very advisable especially as you’re new to Self Assessment.

Hope this is helpful!

Jack

Thanks a lot for the reply! Apologies if I'm being a little dense, but when you refer to paying tax on my income by Jan 31st, you're preferring to anything earned last 1st April 2021? So I'll need to register for self assessment in October, and pay by January 31st? The reason I'm a little confused is because that wouldn't have been a full tax year by that point?

Another question - I'm in PAYE part time and am also a sole trader, does that mean I don't get my 1k tax allowance as a sole trader?

Thanks very much in advance for clarifying

TomFromCrunch

Hey Jack! No worries, these things often take some time to grasp. It gets easier!

The January deadline is for the full tax year before, not the one you're currently in.

So for example, you'd pay for 20/21 (April 2020-April 2021) in January 2022.

If HMRC confirm you don't need to do a 20/21 Self Assessment, you won't need to pay this January coming (2022), but for your 21/22, you'll need to pay it in January 2023.

Obviously if you wanted to be SUPER-efficient, you could submit it in April 2022, pay it by May, and then put your feet up.

Re: the £1000 'allowance' - this continues to apply, even if you have PAYE income. The £1000 relates specifically to the first £1000 of Sole Trade income - other income doesn't impact this.

Hope this makes sense!

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