Declaring a retainer and small work payments
Discussion
Hoping someone can assist here.
I work for an organisation that pays me PAYE, however I have been approached by a second organisation that I have done some work for in the past, who want to pay me a retainer to provide IT consultancy when necessary.
As this would be a regular payment, being paid by bank transfer, and being an honest person, I need to declare this income, and pay the necessary tax on it.
However, the amount for the retainer and probably for the work also is not enough to warrant the setting up of a business, and if it's going to cost me whatever iot costs to run a business in addition to the work they would like me to do, then it's not worth doing.
Is it as simple as going self assessment, and just declaring it as income not taxed at source?
I work for an organisation that pays me PAYE, however I have been approached by a second organisation that I have done some work for in the past, who want to pay me a retainer to provide IT consultancy when necessary.
As this would be a regular payment, being paid by bank transfer, and being an honest person, I need to declare this income, and pay the necessary tax on it.
However, the amount for the retainer and probably for the work also is not enough to warrant the setting up of a business, and if it's going to cost me whatever iot costs to run a business in addition to the work they would like me to do, then it's not worth doing.
Is it as simple as going self assessment, and just declaring it as income not taxed at source?
There is an area on the Self Assessment income for Sundry Income. It's a "catch all" phrase for income that doesn't fit into the normal categories.
However, your income from these people really does seem to be Self Employment income and should really be returned as such. Don't forget that you can offset legitimate business expenditure against self employment income so trying to categorise it as something it isn't might result in you paying too much tax.
As there will be a need to return this income on a Self Assessment tax return, you might as well enter the income in the correct section of the self assessment tax return as and when you submit that return.
You will need to notify HMRC that you have a source of self employment income within three months of the income starting to be received.
You may have a liability to Class 2 NI but you can apply to be exempted from this if your overall self employment income for the entire tax year is less than £5,075. By "Income" I mean self employment income LESS allowable self employment costs.
However, your income from these people really does seem to be Self Employment income and should really be returned as such. Don't forget that you can offset legitimate business expenditure against self employment income so trying to categorise it as something it isn't might result in you paying too much tax.
As there will be a need to return this income on a Self Assessment tax return, you might as well enter the income in the correct section of the self assessment tax return as and when you submit that return.
You will need to notify HMRC that you have a source of self employment income within three months of the income starting to be received.
You may have a liability to Class 2 NI but you can apply to be exempted from this if your overall self employment income for the entire tax year is less than £5,075. By "Income" I mean self employment income LESS allowable self employment costs.
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