If your earnings are ��20,000 after expenses have been taken off, you then take off the ��6475 tax-free personal allowance. You would pay tax on the difference of ��13,525 at 20% (1/5) = ��2,705. For the self-employed, you have to complete an annual Tax Return, which gets issued on 6th April each year, and pay tax twice a year, on 31st January and 31st July. The rules for people when starting are a bit complicated, and I don t think this is the place to put reams of explanations. However the tax year goes from 6th April to 5th April, and income you have received from 6th April until the date of starting self-employment is also taken into account when calculating your liability. You are, however, given credit for any tax already paid, perhaps under PAYE.Although you may be under the limit at which you have to register or charge VAT, you may wish to register so that you can claim business VAT refunds.Self-employed people have to pay both Class 2 and Class 4 NI contributions. Class 2 is a fixed weekly rate, Class 4 is based on profits, a tax in all but name. See http://www.hmrc.gov.uk/rates .
Oh Dear, I think you need to talk to Business Link or an Accountant before you start. You will only pay tax on your net profits. As for vat you cannot claim it back unless you are VAT registered and you do not have to do that until your income is 68k a year.
