Self Employed Tax Question
Discussion
I am currently FT employed and my employer pays my tax for me direct to HMRC.
I have seen a job I want to do. Its only for a small sum over a couple of days and the total pay is £180. Thing is this company just pays the money to the employee directly and (as I understand) tells the tax people with my National Insurance number. Effectivley self employed I think.
My friend said he did a similar thing once and had to fill in a massive tax form to send back to HMRC... is this correct and is it going to be more hassle than it is worth?
I am not particularly desperate for the money but I want to do the job (on the side with my normal job) - its a one off and I don't plan to do the same again this year.
I have seen a job I want to do. Its only for a small sum over a couple of days and the total pay is £180. Thing is this company just pays the money to the employee directly and (as I understand) tells the tax people with my National Insurance number. Effectivley self employed I think.
My friend said he did a similar thing once and had to fill in a massive tax form to send back to HMRC... is this correct and is it going to be more hassle than it is worth?
I am not particularly desperate for the money but I want to do the job (on the side with my normal job) - its a one off and I don't plan to do the same again this year.
Is it going to be a regular thing ? If so then you are self-employed so will need to inform HMRC. However, assuming that HMRC find out, you should be able to fill in a shortened version of the self-assessment return which is nowhere near as complicated as the old-style SA form used to be.
Go on the HMRC website - loads of info there
Go on the HMRC website - loads of info there
Technically, it is "self-employed" income and technically, it would require a set of self-employed accounts and a self-assessment tax return. But, as it is such a small amount, the Revnue will be happy for you to let them know on a more casual basis and will collect the tax due, if at all possible, through your tax code. Bear in mind that we are almost at the end of the 2008/09 tax year and the Revenue will now not be able to adjust the 2008/09 code and would now make any adjustments on your 2009/10 code instead.
mouk786 said:
So say I get paid £180 in August can they just adjust my September pay with my normal employer to take into account the extra 180 quid and then revert back to normal thereafter or does it get more complex than that?
More complex than that I'm afraid.[awaits Eric's contribution!]
Once you have told them how much extra you have earned, HMRC will amend your code, and will begin collecting the extra tax due from the next month. However, the tax will be collected at a rate of 1/12th per month, so if your tax code is changed in August, by the end of the tax year the following April, you will only have paid 8/12ths of the tax you owe.
So effectively, you will have underpaid your tax at the end of the tax year, This underpaid amount will then be collected over the NEXT twelve months, again through your tax code.
It gets more complicated than that, and you could pay the balance of the underpaid amount in a lump sum if you wished - but for such a small amount, I would just let them collect it through the code. (You will hardly notice the difference in your tax deductions to be honest)
mouk786 said:
sounds like a load of hassle
what happens if i take the money and ignore the hmrc?
Then you would be breaking the law, by evading tax.what happens if i take the money and ignore the hmrc?
mouk786 said:
i presume if they don;t take it via my FT employer i have to send them a cheque or somehting?
If you tell HMRC at the end of the tax year, then they could send you a bill for the amount you will owe. But by NOT telling them that you have earned the money at the time (or certainly within three months of earning it) you may incur Mr Revenue's wrath. Best bet is to call them and ask them. You should get the correct advice. Alternatively you could employ an accountant to sort it for you, but obviously that would cost you!
mouk786 said:
damn government making it difficult to work and add to the economy 
Yep! mouk786 said:
what will they change the tax code to?
They will adjust your tax code so that you pay more tax. (Usually, the number part of your tax code will decrease)Of course, it all depends what your current tax code is.
If your current tax code was say 500L, when you declare the £180 you have earned, the code could change to 482L
In essence it means that you earn less money before you start paying tax (which is how they would collect the extra that you owe)
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