Tax & NI - self employed

[MrHat]

I am posting this on behalf of someone else:

 

A person I know used to be employed as a support worker by AgeUK but about 10 months ago left. During this time, she never earnt enough to pay tax (I think £400 pcm is the highest she ever recieved). She would have been on the PAYE system then.

 

Since she left, she has been working privately doing a similar job for her own clients (3 or 4 of them) and earning about £250 pcm. These clients tend to pay these funds by standing order into her personal bank account or by cheque. She keeps a record of all transactions relating to this work. This is her only income.

 

Question is: Should she be filling out tax returns on an annual basis and notifying HMRC of her earnings or does she not need to due to being well below the threshold?

 

Thanks

[freakyleaky]

Yes she definitely should be filing a tax return.

She needs to contact HMRC and they will let her know what information they need from her.

[MrHat]

Does the fact that she has been working like this since August last year mean that she will get fined for not filing a tax return by now?

[Gbarbm]

HMRC may consider a failure to notify penalty in respect of income tax and Class 2 NI

The penalty can be mitigated by the way in which your friend shows, tells and helps HMRC in determining her liability.

My advice would be to ring HMRC and inform them of her self employment, if she only receives £250 PCM it's unlikely that she will have any liability because she will be able to claim allowable expenses such as fuel, phone bills etc which will reduce the amount still further. The fact that there is not likely to be any liability to tax does not remove the requirement to inform HMRC

[MrHat]

thanks for the advice, I will pass this on

[freakyleaky]

As far as I remember there is a time limit in which you have to inform HMRC of liability for self assessment.

As Gbarbm says though it's doubtful there will be apenalty applied if she is upfront about her mistake and tells them everything they need to know.

[bumblewasp]

You MUST inform HMRC within 3 months of commecing self employment. BUT I have always found HMRC very helpful if you approach them. Tell them you wish to file a self employment return, but didn't realise you should have registered first. It is unlikely they will impose any fine to be honest. HMRC are really after people who dodge tax, not those who are ineffcient with small matters.

[frank fist]

I am posting this on behalf of someone else:

 

A person I know used to be employed as a support worker by AgeUK but about 10 months ago left. During this time, she never earnt enough to pay tax (I think £400 pcm is the highest she ever recieved). She would have been on the PAYE system then.

 

Since she left, she has been working privately doing a similar job for her own clients (3 or 4 of them) and earning about £250 pcm. These clients tend to pay these funds by standing order into her personal bank account or by cheque. She keeps a record of all transactions relating to this work. This is her only income.

 

Question is: Should she be filling out tax returns on an annual basis and notifying HMRC of her earnings or does she not need to due to being well below the threshold?

 

Thanks

 

 

Yes she should, even if she makes less than the tax bracket she still needs to submit to the tax man and needs to apply for a utr which she should have done within the first three months.

[King_Prawn]

Your friend should also be paying Class 2 NI as she is self employed. However, given that her income appears to be so low, she can make a claim for Small Earnings Exception by completing the Form CF10.

 

She should have also kept a record of any expenses she may have incurred such as travel and deduct this from her income.