tax, vat, self-employed, freelance, registaration - help!

[jayoh]

Hi there,

I am an artist and i work sort of as and when a job arises. they are only short term jobs. in between in sign on. i am trying to build up a reputation

trouble is what do i do about tax and vat etc. i don't get enough work to live on and get long periods of no work. i am looking for something else to do inbetween but haven't had much luck as they don't want you to leave when another job comes up.

you see some jobs employ me as self employed or freelance or on the payroll. i haven't been doing it long and i don't want to give what little i do get to the tax man. is there a low limit to this or is any amount taxable?

i often have to give invoices to the company weekly or at the end and should i have a vat registration number on there? i don't have a number at the moment - do i need one? i have been asked and avoided the issue and they just let it go...i am confused, i just don't understand it all.

i sometimes give my NI number - am i being taxed anyway and don't have to do anything myself?

should i be filling in returns a saving personal receipts and what should i call myself?

please help i am confused

[jason1980]

Hi

It is ok for you to give employers your NI number as they need to record who they have paid money too for th einland revenue.

You are allowed to earn �5035 a year tax free under the tax code 503L.

To have a VAT number is optional until your sales reach �60,000 a year. So you dont need a VAT number or to pay VAT until you reach �60,000 a year in sales - but you can not charge VAT either.

It seems to me that all you should be doing is looking for a job as you have been and keep all your art work self employed, keep a record of all the income and any expenses that you pay out, like materials then complete a self assessment form each year from the HM Revenue & Customs (formerlly Inland Revenue). - On this form you need an employment insert to be included, and on the form itself complete the last few self employed red section with what income you receive from the art work

[jedimistress]

You need to register as self employed with the Inland Revenue. Plus with the National Insurance Contrubutions Office. This is generally done at the same time.

Then each year you will be sent a tax return to fill in. You put all your sources of income onto it. Wether it was employment income or self employed income. They will then take the ball park figure of your total earnings for the year and work out your tax. It may be more or less than the tax you have paid at source throughout the year, so you will end up with a liability or refund.

Keep all receipts and you can offset the relevant ones against your self employed income.

Don't worry about VAT unless your turnover is greater than �60,000.

[Misty77]

The VAT threshold is currently �61000 - you are obliged to register if your 12 month rolling turnover is going to hit this figure. You can register voluntarily if your turnover is less - but you need to look at all the pro's and cons. What you need to do is look at your customer base. If you deal mainly with the public, they cannot reclaim the Vat you charge - and your prices will be 17.5 % higher than someone else who isn't regsitered. However, if you deal mainly with businesses they can reclaim the Vat. Being Vat registered can make the business look bigger than it is and can give it more credibility. Try: www.hmrc.gov.uk or www.businesslink.gov.uk for hmore help, good luck !

[dougie2]

h i you should first off register yourself with the tax office because what ever you do under your own steam you are classed as self employed and and must have accounts and also pay class 2 stamp.

what ever you earn less expenses is your net profit, which is taxed after your tax free allowance has been deducted depending wether or not you have other income of course. (see example).

net profit 9000

less allowance 4600

taxable income 4400

Any person classed as self employed should register within 3 months with the TAX office they are very helpful.

As far VAT goes you do not need to register if you are earning less than i think it's in the 50,000 plus bracket, however you can register under the freshold if you wish personally I'd wait until you are earning big money.

good luck