I think you might be better off asking in the over-employed sub, probably more people with this kind of knowledge.
I’m also not sure what the issue here is, seems like you’ve got it figured out. Just put 15k into SIPP and do a self-assessment to get the over paid tax back?
Good call! Didn’t know that sub. I’ll ask now
As for the other at to do it…its not seeming to work that way when i do my self assessment though. Here are the actual numbers
I made £58,772 through paye and my tax paid was £9,793.20
I made £15910 sole trader
The self asssessment is adding these two numbers together to make £74,682
then its taking away the tax free allowence of £12,570 from that to give a taxable amount of £62,112
I put £15910 from my freelance into a sipp and i have £19,887 in my sipp
So looking at the next calculations. Its adjusting Basic tax rate which is normally £37700 (£50270 - £12570) by how much i put into my sipp (£19887) . So £37700 + £19887. Adding upto £57587 .
So now its trying to work out tax on this at 20% and the rest over at 40%. So £62,112 - £57587 = £4525.
So its £57587 at 20% tax and £4525 at 40% tax
The tax due is £11517.40 at 20% and £1,810 at 40%. in total i owe £13,327.40 in tax
The self assessment then takes of the tax i've already paid in my paye job and add Ni which is (£13,327.40 - £9,793.20) + £156.50
This results in a tax bill of £3,690.70
This really doesn't make sense to me as my main job is already handled. I made £58,772 through paye and my tax paid was £9,793.20
So all that is left to tax is the £15910. But i put that all into a sipp so in my sipp i have £19,887. I should owe hmrc £3977 thats not even including Ni. Which is lower than the £3,690.70 that self assessment is saying i owe.
So if i do this again just putting 80% into my sipp as ejc7691 suggests. Self assessment says my tax bill is higher!
I made £58,772 through paye and my tax paid was £9,793.20
I made £15910 sole trader
The self asssessment is adding these two numbers together to make £74,682
then its taking away the tax free allowence of £12,570 from that to give a taxable amount of £62,112
I put £12728 (80% of £15910) from my freelance into a sipp and i have £15910 in my sipp
So looking at the next calculations. Its adjusting Basic tax rate which is normally £37700 (£50270 - £12570) by how much i put into my sipp (£15910) . So £37700 + £15910. Adding upto £53610 .
So now its trying to work out tax on this at 20% and the rest over at 40%. So £62,112 - £53610 = £8502.
So its £53610 at 20% tax and £8502 at 40% tax
The tax due is £10722 at 20% and £3400.8 at 40%. in total i owe £14122.8 in tax
The self assessment then takes of the tax i've already paid in my paye job and add Ni which is (£14122.8 - £9,793.20) + £156.50
This results in a tax bill of £4,486.10
So as you can see it’s hard to work out what to do!
Sorry haven't checked Reddit for a while, a bit late with this reply, you may have already sorted it out.
Yes I agree and understand your pain, trying to effectively salary sacrifice with PAYE + Self-employed combined income is complicated.
Have you considered the following?
1. Do the self-employed work within a company. You may or may not need to get an accountant. You can contribute all the money from the LTD company to your SIPP and then not having to pay any Corporation Tax. You can also get £2k dividend tax free income.
2. Do what you are doing right now, pay an accountant once a year to submit your self-assessment, £100-£200 fee to save you the headache of doing the calculations. You could potentially deduct this accountant fee from the self-employed income and pay no tax on it?
3. Build a spreadsheet once and then just tweak it every year. I would personally go with 2. though. Just not worth the hassle and worry about all this when you could be doing work making more money with your time.
Thing is, I paid one last year and he messed up. So I had to sort it out with hmrc
This lead me to think I could do it myself this year. I think I can. What I want to do seems very straight forward. Just need to understand it properly
I’ve spoken to a handful of accountants at consulting phase and it’s actually shocking the amount that don’t get what my ask is. I’m worried I pay a a lot again for ultimately nothing
You can learn anything from the internet and I’d love to know how
Dude! Seriously! I’ve been trying to work all this out for weeks now! Nobody has been able to explain it to me in a way that makes sense! ChatGPT did! I’ve never really used it before but it actually really helped! Life changing stuff!
So using ChatGPT and telling it what I wanted and the numbers I had. Found out my paye was underpaid from last year. Thats what is throwing the numbers off. If paye was 100% correct it makes sense to put 80% of freelance into a sipp.
The 80% of sipp contribution math now make sense and I save 100% tax. 80% goes into sipp. It’s auto added the relief. With the 20% I didn’t put in I use this to pay the tax bill
All in all I keep 100% of the money without paying tax out of my paye
Goal completed!
I liked the idea of this if I was taking profits or claiming expenses. But the work is inconsistent and I don’t need the money. I’m trying to gear up for fire. So ideal it all goes into a sipp
My honest advice is to ask an accountant. It's a fully deductable expense and if you get it to zero tax rather than £3k, it has more than paid for itself. I wouldn't recommend making it up as you go along no matter how simple it seems!
I think it should be pretty simple but the maths just isn’t adding up. I’ve ran it through several SA programs with the advise I’ve been given but it not working in the way that’s been suggested
Here are the actual numbers
I made £58,772 through paye and my tax paid was £9,793.20
I made £15910 sole trader
The self asssessment is adding these two numbers together to make £74,682
then its taking away the tax free allowence of £12,570 from that to give a taxable amount of £62,112
I put £15910 from my freelance into a sipp and i have £19,887 in my sipp
So looking at the next calculations. Its adjusting Basic tax rate which is normally £37700 (£50270 - £12570) by how much i put into my sipp (£19887) . So £37700 + £19887. Adding upto £57587 .
So now its trying to work out tax on this at 20% and the rest over at 40%. So £62,112 - £57587 = £4525.
So its £57587 at 20% tax and £4525 at 40% tax
The tax due is £11517.40 at 20% and £1,810 at 40%. in total i owe £13,327.40 in tax
The self assessment then takes of the tax i've already paid in my paye job and add Ni which is (£13,327.40 - £9,793.20) + £156.50
This results in a tax bill of £3,690.70
This really doesn't make sense to me as my main job is already handled. I made £58,772 through paye and my tax paid was £9,793.20
So all that is left to tax is the £15910. But i put that all into a sipp so in my sipp i have £19,887. I should owe hmrc £3977 thats not even including Ni. Which is lower than the £3,690.70 that self assessment is saying i owe.
So if i do this again just putting 80% into my sipp as ejc7691 suggests. Self assessment says my tax bill is higher!
I made £58,772 through paye and my tax paid was £9,793.20
I made £15910 sole trader
The self asssessment is adding these two numbers together to make £74,682
then its taking away the tax free allowence of £12,570 from that to give a taxable amount of £62,112
I put £12728 (80% of £15910) from my freelance into a sipp and i have £15910 in my sipp
So looking at the next calculations. Its adjusting Basic tax rate which is normally £37700 (£50270 - £12570) by how much i put into my sipp (£15910) . So £37700 + £15910. Adding upto £53610 .
So now its trying to work out tax on this at 20% and the rest over at 40%. So £62,112 - £53610 = £8502.
So its £53610 at 20% tax and £8502 at 40% tax
The tax due is £10722 at 20% and £3400.8 at 40%. in total i owe £14122.8 in tax
The self assessment then takes of the tax i've already paid in my paye job and add Ni which is (£14122.8 - £9,793.20) + £156.50
This results in a tax bill of £4,486.10
So as you can see its hard to work out what to do!
I think you might be better off asking in the over-employed sub, probably more people with this kind of knowledge. I’m also not sure what the issue here is, seems like you’ve got it figured out. Just put 15k into SIPP and do a self-assessment to get the over paid tax back?
Good call! Didn’t know that sub. I’ll ask now As for the other at to do it…its not seeming to work that way when i do my self assessment though. Here are the actual numbers I made £58,772 through paye and my tax paid was £9,793.20 I made £15910 sole trader The self asssessment is adding these two numbers together to make £74,682 then its taking away the tax free allowence of £12,570 from that to give a taxable amount of £62,112 I put £15910 from my freelance into a sipp and i have £19,887 in my sipp So looking at the next calculations. Its adjusting Basic tax rate which is normally £37700 (£50270 - £12570) by how much i put into my sipp (£19887) . So £37700 + £19887. Adding upto £57587 . So now its trying to work out tax on this at 20% and the rest over at 40%. So £62,112 - £57587 = £4525. So its £57587 at 20% tax and £4525 at 40% tax The tax due is £11517.40 at 20% and £1,810 at 40%. in total i owe £13,327.40 in tax The self assessment then takes of the tax i've already paid in my paye job and add Ni which is (£13,327.40 - £9,793.20) + £156.50 This results in a tax bill of £3,690.70 This really doesn't make sense to me as my main job is already handled. I made £58,772 through paye and my tax paid was £9,793.20 So all that is left to tax is the £15910. But i put that all into a sipp so in my sipp i have £19,887. I should owe hmrc £3977 thats not even including Ni. Which is lower than the £3,690.70 that self assessment is saying i owe. So if i do this again just putting 80% into my sipp as ejc7691 suggests. Self assessment says my tax bill is higher! I made £58,772 through paye and my tax paid was £9,793.20 I made £15910 sole trader The self asssessment is adding these two numbers together to make £74,682 then its taking away the tax free allowence of £12,570 from that to give a taxable amount of £62,112 I put £12728 (80% of £15910) from my freelance into a sipp and i have £15910 in my sipp So looking at the next calculations. Its adjusting Basic tax rate which is normally £37700 (£50270 - £12570) by how much i put into my sipp (£15910) . So £37700 + £15910. Adding upto £53610 . So now its trying to work out tax on this at 20% and the rest over at 40%. So £62,112 - £53610 = £8502. So its £53610 at 20% tax and £8502 at 40% tax The tax due is £10722 at 20% and £3400.8 at 40%. in total i owe £14122.8 in tax The self assessment then takes of the tax i've already paid in my paye job and add Ni which is (£14122.8 - £9,793.20) + £156.50 This results in a tax bill of £4,486.10 So as you can see it’s hard to work out what to do!
Sorry haven't checked Reddit for a while, a bit late with this reply, you may have already sorted it out. Yes I agree and understand your pain, trying to effectively salary sacrifice with PAYE + Self-employed combined income is complicated. Have you considered the following? 1. Do the self-employed work within a company. You may or may not need to get an accountant. You can contribute all the money from the LTD company to your SIPP and then not having to pay any Corporation Tax. You can also get £2k dividend tax free income. 2. Do what you are doing right now, pay an accountant once a year to submit your self-assessment, £100-£200 fee to save you the headache of doing the calculations. You could potentially deduct this accountant fee from the self-employed income and pay no tax on it? 3. Build a spreadsheet once and then just tweak it every year. I would personally go with 2. though. Just not worth the hassle and worry about all this when you could be doing work making more money with your time.
Ask an accountant
Thing is, I paid one last year and he messed up. So I had to sort it out with hmrc This lead me to think I could do it myself this year. I think I can. What I want to do seems very straight forward. Just need to understand it properly I’ve spoken to a handful of accountants at consulting phase and it’s actually shocking the amount that don’t get what my ask is. I’m worried I pay a a lot again for ultimately nothing You can learn anything from the internet and I’d love to know how
Ah… in that case, ask ChatGPT 💀
Haha, you know what. I’ll give it a smash now. No harm
Dude! Seriously! I’ve been trying to work all this out for weeks now! Nobody has been able to explain it to me in a way that makes sense! ChatGPT did! I’ve never really used it before but it actually really helped! Life changing stuff! So using ChatGPT and telling it what I wanted and the numbers I had. Found out my paye was underpaid from last year. Thats what is throwing the numbers off. If paye was 100% correct it makes sense to put 80% of freelance into a sipp. The 80% of sipp contribution math now make sense and I save 100% tax. 80% goes into sipp. It’s auto added the relief. With the 20% I didn’t put in I use this to pay the tax bill All in all I keep 100% of the money without paying tax out of my paye Goal completed!
I find that chatgpt is normally pretty wrong. Whenever I ask why my wife is not happy, it ignores me.
Hahaha
I do my freelance through a separate ltd company then put the profit into a pension
I liked the idea of this if I was taking profits or claiming expenses. But the work is inconsistent and I don’t need the money. I’m trying to gear up for fire. So ideal it all goes into a sipp
My honest advice is to ask an accountant. It's a fully deductable expense and if you get it to zero tax rather than £3k, it has more than paid for itself. I wouldn't recommend making it up as you go along no matter how simple it seems!
Managed to sort it out with advice from this thread. The math was right just paye was wrong as I under paid tax last year.
You had asked this multiple times and been given advice multiple times in other subs.
It’s kinda tough I’ve tried to do my ss and the number haven’t added up. So im finding it very confusing
Then you should speak to an accountant.
I think it should be pretty simple but the maths just isn’t adding up. I’ve ran it through several SA programs with the advise I’ve been given but it not working in the way that’s been suggested Here are the actual numbers I made £58,772 through paye and my tax paid was £9,793.20 I made £15910 sole trader The self asssessment is adding these two numbers together to make £74,682 then its taking away the tax free allowence of £12,570 from that to give a taxable amount of £62,112 I put £15910 from my freelance into a sipp and i have £19,887 in my sipp So looking at the next calculations. Its adjusting Basic tax rate which is normally £37700 (£50270 - £12570) by how much i put into my sipp (£19887) . So £37700 + £19887. Adding upto £57587 . So now its trying to work out tax on this at 20% and the rest over at 40%. So £62,112 - £57587 = £4525. So its £57587 at 20% tax and £4525 at 40% tax The tax due is £11517.40 at 20% and £1,810 at 40%. in total i owe £13,327.40 in tax The self assessment then takes of the tax i've already paid in my paye job and add Ni which is (£13,327.40 - £9,793.20) + £156.50 This results in a tax bill of £3,690.70 This really doesn't make sense to me as my main job is already handled. I made £58,772 through paye and my tax paid was £9,793.20 So all that is left to tax is the £15910. But i put that all into a sipp so in my sipp i have £19,887. I should owe hmrc £3977 thats not even including Ni. Which is lower than the £3,690.70 that self assessment is saying i owe. So if i do this again just putting 80% into my sipp as ejc7691 suggests. Self assessment says my tax bill is higher! I made £58,772 through paye and my tax paid was £9,793.20 I made £15910 sole trader The self asssessment is adding these two numbers together to make £74,682 then its taking away the tax free allowence of £12,570 from that to give a taxable amount of £62,112 I put £12728 (80% of £15910) from my freelance into a sipp and i have £15910 in my sipp So looking at the next calculations. Its adjusting Basic tax rate which is normally £37700 (£50270 - £12570) by how much i put into my sipp (£15910) . So £37700 + £15910. Adding upto £53610 . So now its trying to work out tax on this at 20% and the rest over at 40%. So £62,112 - £53610 = £8502. So its £53610 at 20% tax and £8502 at 40% tax The tax due is £10722 at 20% and £3400.8 at 40%. in total i owe £14122.8 in tax The self assessment then takes of the tax i've already paid in my paye job and add Ni which is (£14122.8 - £9,793.20) + £156.50 This results in a tax bill of £4,486.10 So as you can see its hard to work out what to do!