Hello, I have answered you in bold.
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Advice needed, please.
I was a freelancing between August 2021 and May 2022. First time freelancing.
Given that you started freelancing in August 2021 you will need to complete a self assessment tax return for the year ended 5th April 2022 (Fiscal Year 2021/22). The final day for registering for self assessment for 2021/22 was 5th October 2022 so you could receive a fine.
I started a sole trader/ self employed business in March 2022. How do I register my earnings from freelancing? How do I register my business for self assessment?
You will need to complete the Form CWF1 and send it to HMRC.
Because this is in the same financial year, can I treat both of these as the same and have to treat both freelance earnings and self employed business as separate for self assessment?
You can treat both as the same but should you! What if the self-employed business made a loss. In the first four years of trading, you can do a lot with the losses.
For example, I had a client who started a courier business with a van that cost £20,000. Nominally, he made a profit of £5,000 but after making a claim for Annual Investment Allowance on the van, he made a tax loss of £15,000.
I was able to take that loss and take it back three years, to when the client was employed, and obtain a tax refund of £6,000.
What is the process for me going forward?
You need to register for self assessment and get your records in order to file a 2022 Tax Return.
I haven't made much under my self employed business, so I have picked up a PAYE part-time job while I build up my business.
The part-time job will have to be included within your tax return. I would also make sure that you do not pay too much national insurance which tends to occur when someone is employed and self-employed.
Unfortunately I haven't made enough to hire an accountant. Although this is something I would like to do once my business picks up.
A good accountant could be worth his weight in gold. For one thing, the accountant can suggest ways of saving tax. For example, one of your main expenses in your self employed business could be motoring expenses. You can claim for this in two ways:-
1. business proportion of vehicle running costs (i.e. fuel, repairs, insurance and tax) plus capital allowance;
2. mileage allowance.
Your accountant will advise you on the best approach.
TIA
Greatly appreciated.
Finance/ tax not my strength.”
