Posted By KevinD
Dear All,

I have looked through previous threads on consultancy and this doesn't seem to have been covered so was hoping somebody might be able to advise please:

I work full time for an employer but am looking to take on some ad-hoc consultancy work out of hours, weekends etc until I can get established.

I was hoping somebody might be able to advise whether tax relief can be claimed on expenses arising from the self employed work (I want to attend some additional training, send letters, photocopying, mileage etc, costs which would be incurred in setting up the business) if still working for an employer? I realise I would need to keep books for the business but just wasn't sure if you could claim expenses on your own business if still in full time employment.

The tax and NI requirments are the bits I'm struggling most with!

Also, would anyone be able to give a rough idea of the insurance costs please?

Any advice would be much appreciated.

Kind Regards,

Kevin

Posted By AjSaunders
In response to the NI query...i believe the current trigger is around £4600 (or thereabouts) of income (not profit, there is a difference).
So if you plan to earn less than this through self-employment you are liable for class 2 NI contributions.

You can apply for a certificate of small earnings, which i believe is valid for 2 or 3 years through Customs & Excise.

I myself run a small consultancy part-time, as i work full time, and do part-time lecturing - both of which are paid emplyoment and liable for full NI ocntributions.

Ive always had an issue with having to pay additional NI for self-employed work, when i already pay the higher rate twice...something which i think is disgusting.
If you earn more than the small earning trigger you are effectively screwed!!!

Also bear in mind, that just about any valid work you can attribute to the self employed element can be used to offset against tax on any profit - such as time spent, travelling/mileage, consumables, printing, etc, etc.

I would suggest contacting your small business team through Customs & Excise as they run free seminars on small business, self-assessment, etc - and best of all you can offset the time spent on the seminar as valid business cost (time spent and travelling). Good luck.

Posted By Mike Herbert
If i recall correctly.....
When starting your business you need to inform HMRC, as they are now called, to register for tax, NI and VAT. The latter is subject to certain levels of turnover and may not be necessary.
This will mean you receive the additional self assessment pages in your tax return and will put you in the system to pay class 2 NI. As your are employed also you will pay class 1 NI through PAYE. Class 2 is a fixed amount and is generally quite low.
When you get your tax return you will (or your accountant....get one!) find a section to calculate additional class 4 contributions that are based on profits. If this is lower than £5000 (roughly) there is no class 4 to pay.
So you do end up paying NI a couple of times in one way or another.
Only expenses directly attributable to your freelance work can be claimed back against turnover to arrive at gross profit but include such items as accountants fees, IOSH membership, costs of some professional development etc.
Lastly Public Liability/Prof.Indemnity insurance is vital as is Employers Liability if you employ others and is a means of proof that you are self employed rather than an employee of the contracting organisation.
As others have said, the business link sites are very good at explaining this in detail.
Hope this helps a bit
Regards
Mike
(usual disclaimer about accuracy)

Posted By Linda Crossland-Clarke
Hi

That is an awkward question as I know I had this question with the tax people some while ago. Do ring them, so you are noted as asking. Also, under lone working it is perfectly reasonable for you to meet potential clients in a public eatery, as inviting them around to your house could be deamed unprofessional & unsafe... So get that noted too - you can claim more food that way..

NI £2.10 per week unlesss you get an exemption.

Oh also claim a few quid a month towards house heating, elec etc.

Linda

Posted By Christopher
Hi Kevin

Any courses you attend can only be claimed for if they are relevant to your work. I attended a start up course, and was advised, I could attend a course and claim if it was what I was doing at the time of the course and needed it for updating my skills, but if it involved in my developing different skills but same area then I couldn't. If anyone knows any different, then I'm open to having my views changed. It just didn't make sense, as surely people go into self employment and start from scratch. Actually the Business Development Course I went on, was very theoretical. I heard of another one, and the facilitator let me sit in on some of their courses. The marketing was excellent. 'Taste the sizzle, not the sausage'.

Posted By KevinD
Thanks again everyone who has responded. I've been on the phone to an accountant and HMRC and both who are snowed under with tax returns at the moment!

I agree it seems crazy you don't appear to be able to gain tax relief on courses you need to develop new skills! I suppose the good thing is that if you have a general qualification covering most things then you could argue that just about any course can be used as a skills/knowledge update!!

Regards,

Kevin