self employed tax

[sjwright]

Hi im self employed and this is my first year of doing so. Now I understand that the rate of tax is 20% but is this 20% of any income over �5000 or is the 20% of any profit above �5000?

Help!

[BigDave44]

It's actually 20% of the profit, but there are special rules for the first year to cover any differences between your accounting year and the official fiscal year, so you are best advised to consult an accountant (which I am not !). The rates can be found on the HMRC website:

http://www.hmrc.gov.uk/rates/it.htm

If you file your accounts online, the tax will be worked out automatically for you, but please see an accountant as he will advise you as to what you can claim, and things like deductions for personal use of telephone etc.

[rondeau]

Your personal tax-free allowance is actually �5,225. All of your income, including profit, above that amount (up to �34,800) is taxable at 20%. Good advice though, to get an accountant.