Income tax on self employed

[aec5968]

I have been offered a position on a self employed basis within a new salon opening next week. I am a beauty therapist, nail tech and Stylist. We agreed on a 50/50 split. However, he keeps telling me the split is after taxes. They are not VAT registered yet but even if they were, am I right in thinking that because I am self employed I am responsible for my own Income tax, NI and is very unlikely I will reach VAT threshold therefore there should be no deductions to be made before the split?

I look forward to all your feedback

 

[Ruth Mills]

Hmm, that just doesn't sound right to me.

I'd be inclined to speak to Business Link and HMRC to check up on this before you get signed up to anything here, as it seems very strange that they would be wanting 50% of your net, after-tax profits. As the amount of income tax you pay depends on other criteria than your main income, e.g. your tax code, any tax you pay on savings, any other work you do that is taxed, any gift aid payments you make, etc.

Surely they would also be liable to tax on this income too, e.g. corporation tax? So it would seem silly for them to end up paying tax twice, particularly as the rate of corporation tax for small businesses (22%) could well be less than the combined tax and NI that you would pay.

Either way, it definitely makes sense to get this checked out by someone who is properly knowledgeable in such matters before committing yourself. Although I run a business myself, I don't deal with anything that complex!

 

[aec5968]

will do. thanks for your input

 

[Ruth Mills]

Cool, it's a pleasure. I do know from experience though that it's absolutely essential to get your tax affairs spot on when self employed or running a small business. I've used an accountant ever since setting up my company just over 4 years ago, and feel it's definitely worth it in terms of having the confidence that your tax affairs are being run as they should be.