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Finance & Accounting
Pages 6 (1506 words)
TAXATION 1. Sam Smith Computation of taxable trading income for 2011/12 2. Computation of Income tax and National Insurance for tax year 2011/12 Calculations of National Insurance contributions of Sam Smith for the year 2011-12 3. Computation of taxable income, income tax and NIC of Mr Sam Smith on being treated as employee for tax year 2011/12 Computation of Income tax for tax year 2011/12 4.
Whether someone is employed or self employed depends upon the terms and conditions of relevant engagement. The tax and National Insurance contributions (NICs) rules do, however have special rules that apply to certain special categories of workers in certain circumstances. If you work for someone else it is important to know whether you are working for that person in employed capacity or in a self- employed capacity as an independent contractor.” (HMRC)ii Self employed taxpayers have the advantage of claiming wide range of expenses against the receipts of self employment services. “The decision to become self employed can also be affected by tax system.”(David G Blanch flower and Chris Shad forth)iii There is also an advantage of payment of income tax by instalments as against taxes being withheld by the employer under the PAYE scheme. It becomes extremely difficult in many cases to distinguish between self employment status and employee status of a tax payer. Whenever any taxpayer is working on part time basis with more than one entity it is always the desire of HMRC to consider the tax payer under the employee status. ...
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