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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 16237
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I have a question about registering for self assessment /

This answer was rated:

Hello, I have a question about registering for self assessment / self employed.
JA: Are you filing as a sole proprietor or independent contractor?
Customer: Sole proprietor I think but I’m not sure
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: I recently started a small business with my daughter selling handmade items, it started as a hobby and was just wondering how tax works as it is two of us (it is currently my daughter’s fill time job as she is taking a gap year).
Customer: replied 10 days ago.
Hello
Hello,

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Customer: replied 10 days ago.
we are still interested. Thank you.

Hi, Sam here , one of the UK tax Experts here on Just Answer, thank you for your question and I shall reply shortly

Hi

you would need to register as a partnership for the joint venture and then both register for self assessment as one partner ech of the two

The partnership return then would be filed annually with all the income and expenses with the division of net profits allocated between you (assuming maybe 50:50 ) then you each declare your share of the partnership profits on your own self assessment with any other personal income you have on your own

Thanks

Sam

Customer: replied 10 days ago.
Okay, does that mean that the £12,500 tax free allowance applies twice for both of us separately? (I also work another job part time and I earn £16,100 pa before taxes so I’m already paying the taxes for that and I don’t think individually I earn enough to move me to the next threshold). My daughter will be a student at university next year so not sure if that will also have an impact in how much tax she pays?
Customer: replied 10 days ago.
Thank you!

Hi

yes as you each (as individuals) have a personal allowance each which is allocated against your share of the partnership income (and any other income you each personally have)

This is now a new question which you really should have listed as such (as is now the question about the tax you pay) but I will answer on this occasion but new topic has to be a new listing

You will pay just 20% of you share as your personal allowances are already fully utilised against your part time job

Your daughter has no other income so the first £125670 of the partnership income will be tax free and anything over that at 20%

For information
First £12570 tax free

Next £37430 at 20

Then 40% from £50000 to £124,999

(but then lose of personal allowances if income exceeds £100,000 a year)

Thanks

Sam

Customer: replied 10 days ago.
Okay, thanks for answering. How can I ask you more questions? Do I need to start all over again?

Hi

If not to do with the original question then list it as a new one (and if you have signed up for free months membership then it remains free for you) if to do with the first post then you can ask here but the tax positions was over and above the original post as was the tax allowances positions

Thanks

Sam

Customer: replied 10 days ago.
Okay thanks, ***** ***** we register as a partnership?

That is done here - just follow the link

https://www.gov.uk/set-up-business-partnership/register-partnership-with-hmrc

then when the partnership is registered you both need to register as a partner for self assessment each here

https://www.gov.uk/government/publications/self-assessment-register-a-partner-for-self-assessment-and-class-2-nics-sa401

Thanks

Sam

Customer: replied 10 days ago.
Okay, thank you. Just checking would we need to do self assessment twice (for each of us)?

Every year

so if you started trading before 05/04/2021 then by 31/10/2021

So the partnership will be filled after each year end and then so is each of your personal self assessment returns but unless you use third party software the partnership return has to be filed by paper and with HMRC by 31st Oct and your self assessment if filing online by 31st Jan following year (or 31st Oct if filing paper version) s

so 1 x partnership return

2 x self assessment return one for each of you

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 16237
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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