Possible tax implications....
Discussion
I currently work a 9-5 paying 20% tax but there is a possibility that later this year I'll be paid a one off fee from another employer regarding some consulting work I may do for them, this sum will be under £1000 and would not put me up into the next tax bracket.
I have always been a PAYEE person, and this 'second job' bit is all very new to me and the payment will be coming from an official source so not 'cash', now I fully expect to have to pay some tax from the 'second job' but how?
I have always been a PAYEE person, and this 'second job' bit is all very new to me and the payment will be coming from an official source so not 'cash', now I fully expect to have to pay some tax from the 'second job' but how?
raceboy said:
Why do I think that sounds a whole lot easier than I imagine its going to be....
Because it is.If the consultancy work is not going to be under PAYE then you will need to register with HMRC as self employed.
You may also need the assistace of an accountant to compile your self employed accounts to ascertain the profit and to complete your tax return.
For a one off job of £1000 gross it may not be worth all the hassle and potential expense.
I was probably over simplifying it by thinking I could just write the tax man a cheque for a percentage of the payment. 
The payment would be pretty much 100% profit, as other than a bit of petrol it would just be my time I was giving, but depending how it went it might not be a one off.....
The payment would be pretty much 100% profit, as other than a bit of petrol it would just be my time I was giving, but depending how it went it might not be a one off.....
The correct way to report self employment income is to register for self assessment. This will allow you to notify HMRC that you have had self employed income during the year.
Once you discover you are going to have Self Employed income, you must notify HMRC within three months of the self employed activity commencing.
You also need to let them know whether you will need to pay the Self Employed Class 2 Ni contributions.
With a gross income of only £1,000, it is doubtful that you will have to - but you still have to notify them.
Don't forget that self employed tax is based on the PROFIT from self employment, not the full income received. So, with an income of £1,000 the taxable element may be quite a bit less by the time you have allowed for business costs.
When you submit a self assessment tax return, you declare ALL the income you received during the year. This will, of course, include your EMPLOYMENT income as well as the self employment income. You also include income from any other sources, such as interest received, dividends received, rental income etc.
It DOES NOT matter if this income has already been taxed at source (such as salary of bank interest), you still need to declare it all on the return.
Once you discover you are going to have Self Employed income, you must notify HMRC within three months of the self employed activity commencing.
You also need to let them know whether you will need to pay the Self Employed Class 2 Ni contributions.
With a gross income of only £1,000, it is doubtful that you will have to - but you still have to notify them.
Don't forget that self employed tax is based on the PROFIT from self employment, not the full income received. So, with an income of £1,000 the taxable element may be quite a bit less by the time you have allowed for business costs.
When you submit a self assessment tax return, you declare ALL the income you received during the year. This will, of course, include your EMPLOYMENT income as well as the self employment income. You also include income from any other sources, such as interest received, dividends received, rental income etc.
It DOES NOT matter if this income has already been taxed at source (such as salary of bank interest), you still need to declare it all on the return.
Edited by Eric Mc on Sunday 14th July 11:36
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