Tax Tip – Sole Trader Profits

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Setting up as a Sole Trader in the UK means informing the tax office, registering for Self-Assessment, and getting your accounts in order in readiness for the end of the tax year. As a sole trader, you won’t pay yourself a ‘salary’ or a ‘wage’ – the money you take from the business is called a ‘drawing’ and should be noted down – most individuals (with simple tax affairs) can earn (or ‘draw’) up to £12,500 per annum before needing to pay tax.

The amount of National Insurance Contributions (NICs) that you pay will depend on how much you’re earning, and what your financial situation is. The ‘class’ (Class 1, 2, 4, etc) will depend on your personal situation – for example, Class 1A NICs is paid on ‘benefits in kind’.

If you’re not sure whether you’ve covered everything you need to as a sole trader, or you need someone to help you manage your accounts to get them legally compliant and filed on time – we’ve got the team here to help you out!

Our experts have years of dedicated experience in all things tax, and we’re here to make your business life simpler. Visit our website today and discover how we can help you.

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