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Declaring self employed?
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A friend of mine is trying to set up a hairdressing business, travelling to peoples homes to cut hair. she hasnt been doing it very long and she doesnt earn very much at all at the moment. She is not sure whether she should be registering as self employed or continue working "Cash in hand" ? what are the risks with this? She really wants the buisness to take off, but at the moment is struggling to get appointments, let alone worry about paying tax? Any advice appreciated
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do it cash in hand ......for now and she can decide later , - most people dont ask for a reciept either do they in hairdressing .... strictly speaking , within three months , of starting a buisness up , you are required to register with - inland revenue - (tax investigators can search back to about 6 years in retrospect in any undergoing investigation ) -
I am unsure the extent to which the above advice is tongue in cheek.
It is a requirement that you register with HMRC within 3 months of becoming self-employed. If you don't, you may receive a penalty (fine). The details are here.
http://www.hmrc.gov.uk/selfemployed/register-s elfemp.htm
As self-employed, one doesn't have to pay the tax and NI upfront - it will be based on your own self-assessment and payment occurs about 9 months after the end of the tax year (in the first year, at least).
Since she is going to have to pay tax and NI on the earnings anyway, and since the HMRC is pretty wise to the ease with which businesses like hairdressing can be set-up and operate in the black market economy, I can't see any reason not to tell them now.
It is a requirement that you register with HMRC within 3 months of becoming self-employed. If you don't, you may receive a penalty (fine). The details are here.
http://www.hmrc.gov.uk/selfemployed/register-s elfemp.htm
As self-employed, one doesn't have to pay the tax and NI upfront - it will be based on your own self-assessment and payment occurs about 9 months after the end of the tax year (in the first year, at least).
Since she is going to have to pay tax and NI on the earnings anyway, and since the HMRC is pretty wise to the ease with which businesses like hairdressing can be set-up and operate in the black market economy, I can't see any reason not to tell them now.
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I see only buildersmate has actually attempted to give some serious advice then!
"She is not sure if she should be registering as self employed"? I think by the sounds of it she knows fine well she should be. It's a legal requirement. It's tax evasion not to and theoretically punishable by imprisonment (though it would never come to that). In fact she / you want to know what the risks are if you get caught not registered!
If she isn't making money she has nothing much to worry about for tax purposes anyway. You can earn over �5k before paying any tax or NI and from experience a self employed mobile hairdresser isn't likely to make a whole lot more than that, especially given the expenses that can be claimed against her car, phone, laundry costs, etc before tax. There's Class 2 NI to a minor extent though but that's only just over �2 per week.
As for the risks of not doing it correctly well, the obvious risk is you get caught. She'll be assessed for estimated tax lost plus interest and penalties (or accurate tax lost if she has actually kept records that allow this to be done). She also presumably wouldn't be making any NI contributions at all if she's working the balck economy only so won't be adding to her state pension fund which may or may not be important.
"She is not sure if she should be registering as self employed"? I think by the sounds of it she knows fine well she should be. It's a legal requirement. It's tax evasion not to and theoretically punishable by imprisonment (though it would never come to that). In fact she / you want to know what the risks are if you get caught not registered!
If she isn't making money she has nothing much to worry about for tax purposes anyway. You can earn over �5k before paying any tax or NI and from experience a self employed mobile hairdresser isn't likely to make a whole lot more than that, especially given the expenses that can be claimed against her car, phone, laundry costs, etc before tax. There's Class 2 NI to a minor extent though but that's only just over �2 per week.
As for the risks of not doing it correctly well, the obvious risk is you get caught. She'll be assessed for estimated tax lost plus interest and penalties (or accurate tax lost if she has actually kept records that allow this to be done). She also presumably wouldn't be making any NI contributions at all if she's working the balck economy only so won't be adding to her state pension fund which may or may not be important.
That is all very noble skyline but this govt takes the p1ss.
I am sick and tired of muslim extremists getting all sorts of benefits.
I have an occupational pension subject to tax. The 10p abolishment was a fiasco.
I have a couple of jobs cash in hand, I am 63, stuff the tax, they can get knotted, they will only waste it, I am saving them the trouble.
I am sick and tired of muslim extremists getting all sorts of benefits.
I have an occupational pension subject to tax. The 10p abolishment was a fiasco.
I have a couple of jobs cash in hand, I am 63, stuff the tax, they can get knotted, they will only waste it, I am saving them the trouble.
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