Income Tax Questions

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munky replied

18 August 2009, 12:26
Thanks, Gonzo. I'll take a look at that site.
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Gonzo replied

18 August 2009, 01:25
Originally posted by munky View Post

Hi,

I've just registered as a sole trader two weeks ago and I'm finding all the tax stuff, well, rather taxing.

For example, I read on the bytestart site that you will get taxed on salary on any paid jobs you do. Are they serious? So if I do work for an employer who deducts my taxes for me, like in a "normal" job I then get taxed a second time because I'm registered as a sole trader?

Another thing I'm not sure about is getting taxed on savings. Why do sole traders get taxed so much on savings. I read that it's 20% for most people. Does this mean that if I don't spend any money that I pay myself, I'm automatically going to get taxed for it on top of getting taxed for my turnover?

Thanks for your help,

Garry

This is probably not the best forum to ask this type of question on because few (if any) of the IT Contacting people will be sole traders. Here most people are either operating Limited Companies or are being paid through Umbrella Companies.

These people may be a better bet for you:
http://forums.freelanceuk.com/

But from my knowledge:

1. No. You will only be taxed once. If your employer deducts the taxes then that is your tax mostly taken care of. If you have several employers during the year then you will probably need to do a tax return to sort things out at the end of the year.

My understanding is that if you are freelance then your clients will pay you without deducting taxes and the tax will be your responsibility.

2. You pay tax on savings income i.e. interest or dividends, not the amount of the savings themselves.

This was always the case, your freelance status has not changed that in any way.

I am not an accountant so don't take my word on any of this.

It might be possible to get you better answers if you gave us a better idea of exactly what you will be doing as a freelancer.
Leave a comment:
munky started a topic Income Tax Questions

18 August 2009, 01:04
Income Tax Questions

Hi,

I've just registered as a sole trader two weeks ago and I'm finding all the tax stuff, well, rather taxing.

For example, I read on the bytestart site that you will get taxed on salary on any paid jobs you do. Are they serious? So if I do work for an employer who deducts my taxes for me, like in a "normal" job I then get taxed a second time because I'm registered as a sole trader?

Another thing I'm not sure about is getting taxed on savings. Why do sole traders get taxed so much on savings. I read that it's 20% for most people. Does this mean that if I don't spend any money that I pay myself, I'm automatically going to get taxed for it on top of getting taxed for my turnover?

Thanks for your help,

Garry
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