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Posted by: Nissa Dewshi, 7 Sep 2010 4:26PM
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National insurance and VAT

Im just setting up practising from home and would like to know how other therapists who are self employed go about regarding Taxes and Natioanl insurance. Would like some information regarding these matters please N


Angela Rawlins
7 Sep 2010 6:27PM

Well, first of all you need to keep records of what you pay out (expenses) and also what you are taking:) You may need an accountant. You will need to find out about Self Employed National Insurance payments - an Accountant should know:) Ifyou know of a friendly Accountant,could save you money in his fees:) Ask friends or family for a contact
Marian Child
7 Sep 2010 7:11PM

Some accountants give you an hour of free advice. It may also be an investment to have an accountant for the first year, just to set you up properly with NI, tax office and best ways for you to keep records. A book-keeper will also be able to give advice.
Angela Rawlins
7 Sep 2010 7:35PM

Hi My husband and daughter are Accountants and they tell me I do not need a book keeper. You just need to keep very simple book with outgoings and incomings:)
Sue Hannaford
7 Sep 2010 9:29PM

I am surprised that you didn't have a module on your course dealing with this - I did - but it was over 10 years ago! Go the the Inland Revenue's website http://www.hmrc.gov.uk/index.htm. The purple box is for individuals and employees. The first section you need to look at are National Insurance - click through and go about half way down the page - info on If You Are Self Employed. Note the info on low earnings exemption - if you don't want to pay NI you may not have to if your profits for the year are below a certain amount. The second section is Self Assessment and again there is a section specifically on what you need to do if you are self employed. I keep all my receipts and record of income, follow the rules, fill out a short tax return for myself. I find that if I am not sure what approach to take regarding something that the tax office are happy to advise. Good luck!
Joy Healey
7 Sep 2010 9:59PM

I was surprised to be told that although I pay NI in my employment, I also needed to pay the self-employed NI too. Your circumstances may differ, and pls don't take my word for it - but just something else to watch out for.
Nissa Dewshi
8 Sep 2010 12:15AM

Thank you for your advice, it has been quite helpful. I also wanted to know if I were to do any events work say a one off event, would I be responsible or the employer to pay taxes and NI, would I need to pay NI considering my earnings a quite low, as not started work yet.
Sue Hannaford
8 Sep 2010 8:33AM

Event working is usually on a self employed basis so you would be responsible for your tax and NI. This page tells you everything you need to know about registering. http://www.hmrc.gov.uk/working/intro/selfemployed.htm As I said before, if your earnings are low you can apply for exemption from self employed (class 2 and 4) NI contributions. There are legal implcations if you don't register as self employed in a timely manner. Hope that helps.
Helen Sullivan
9 Sep 2010 1:59PM

Hi, I attended an Inland Revenue course which dealt with book keeping/records and NI contributions, there are 2 types, NI 2 you pay a set fee every week, and NI 4 which is based on a percentage of your profit. First things first - you need to advise the Revenue that you are self employed, if you are going to be a full-time therapist you may be able to qualify for a NI excemption as your earnings may be lower than the NI threshold (approx £100 p/w) - I did this and was given a certificate which was valid for 2.5 tax years, as you are unlikely to be making a great deal of profit during your start up period. The revenue and business gateway are very helpful, and if in doubt when it comes to tax return time you can take all your papers in to see an advisor and they will help you thru it. Any tax due is to be paid before the 31/1 in the year after it has been earned. If you are going to be working f/t elsewhere and still paying NI & Tax you will need to complete a tax return detailing both sets of income and its easier if you have your P60 to hand to do this. You need to keep records of all outgoings including mileage and all income, a cash book or a spreadsheet can be used for this with a receipt book.Then you tot up your income less outgoings less any taxable reliefs such as mileage allowance and you are liable to Tax & NI on the profit. If you are unsure whether you can claim for somethingthe tax advisors are happy to discuss in person or over phone. I know from experience that you cannot claim mileage for attendance on the Self Employed and Taxation course or for further training courses, but you can claim the costs of additional training, uniforms and anything else for your work. good luck Helen
Julie Egginton
13 Sep 2010 10:24PM

Hi, HMRC run courses to help you with self employment and tax, and your local Business Link office run start up courses and can provide an adviser to help you with any queries you have in starting up your business.
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