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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15914
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a self employed bricklayer and I am taxed at source

Resolved Question:

I am a self employed bricklayer and I am taxed at source by a payment agency called 'The Guild'. I have earnt £32,500 in the 2015/16 tax year and have been taxed £6,500 on this sum. My understanding is that everyone is entitled to earn £10k per annum before paying tax and therefore I assumed that my rebate would be a minimum of 2k to account for this. However initial self assessment calculations (including additional expenses totalling roughly 5k) online are coming in at only £1,300. Can you shed any light?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. If you earned £32,500 and incurred expenses of £5,000, you made a profit of £27,500. The personal allowance for 2015/16 is £10,600 so you have net taxable income of £16,900. Income Tax at 20% is £3,380. Class 4 NIC is £1,749.60 (£32,500 - £5,000 = £27,500 - £8,060 x 9%). Class 2 NIC is £145.60 (£2.80 x 52). That's a total tax and NIC liability of £5,275.20. Deduct the £6,500.00 tax deducted at source and you are left with a repayment of £1,224.80. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thanks, ***** ***** can kind of get my head around that. Can I get you to explain the £8,060 x 9% calculation for me though as that's where you loose me.Thanks
Expert:  TonyTax replied 1 year ago.
You don't pay Class 4 NIC on the first £8,060 of your profit. Take a look here (3.2).
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Customer: replied 1 year ago.
Ah that makes sense! Thanks very much. Youve been most helpful.
Expert:  TonyTax replied 1 year ago.

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