I'm definitely taking the plange and starting out as a S/E Consultant WEF 7th April (to keep the tax simple) As I will be working from home, I will not have any overheads apart from business mileage, travel, internet and phone.

I will be opening a separate bank account - as a sole trader can this be a further personal current account, or do I have to open a busines account ?

I think I've got my head around the tax implications and self assessment, but could somebody just double check my workings based on a mythical £4,000 per month income (so I get the 40% right, should I earn in that bracket) using 2008-09 tax and NIC rates, plus charging my clients 40p per mile mileage expense ?

My figures as follows:

Income = £4000
Mileage 1,000 @ 40p = £400
Total income £4400

Expenses claimed against tax,

Mileage = £400
Travel, train etc = £100
Phone, Internet etc = £100

Total expenses claimed against tax = £600

Taxable income: £4400 - £600 = £3800

Less personal allowance (£5435 / 12) = £452.92

Taxable income after allowance = £3347.08

Income Tax - £3,000 @ 20% = £600. £347.08 @ 40% = £138.83.

Total Income Tax = £738.83

NIC 2 = £9.96 NIC 4 (£40040 - £5435 = £34605 / 12 = £2884) £2884 @ 8% = £230.72. £463.08 @ 1% = £4.63

Total NIC - £9.96 + £230.72 + £4.63 = £245.31

Total Income = £4400
Total Tax = £738.83
Total NIC = £245.31

Net = £3415.86

Fingers crossed, I've got this right !