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  • FIRST POST
    • clhs
    • By clhs 31st May 17, 1:51 PM
    • 60Posts
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    clhs
    Going from FT PAYE to PT PAYE and PT self-employed?
    • #1
    • 31st May 17, 1:51 PM
    Going from FT PAYE to PT PAYE and PT self-employed? 31st May 17 at 1:51 PM
    Hi, all,

    Politely requesting advice/ input.

    I currently work full-time on a PAYE basis for a great company going through a hard time financially. I've been offered some part-time (two days per week) work with another company in the same field. Told current employer about the offer and they are very happy for me to drop down to three days per week to save them some money.

    Having calculated my daily rate, I am thinking of working with the new client for two days per week on a self-employed basis, issuing invoices to the new company. What I don't know is how much tax to put aside in a bank account for when I do my first tax return. Assume it's 40%, as my total earnings would be over £33,500. Is that right?

    Anything else I need to be concerned with?

    Thanks so much in advance.
Page 1
    • Dazed and confused
    • By Dazed and confused 31st May 17, 8:36 PM
    • 1,384 Posts
    • 568 Thanks
    Dazed and confused
    • #2
    • 31st May 17, 8:36 PM
    • #2
    • 31st May 17, 8:36 PM
    You appear to have misunderstood the higher rate tax threshold.

    Assuming you get a personal allowance (and don't live in Scotland) then it will be 45,000 in the present tax year before 40% tax starts (11500 + 33500).

    Depending on the profit your business makes though and your personal circumstances you could also have class 2 national insurance, class 4 national insurance, student loan repayments and child benefit charge to pay alongside your income tax (they all form part of your self assessment bill).

    Don't forget if you start in the current tax year your first return will be due by 31:01:2019 which is also when you will have to pay any tax, NIC etc due for 2017:18. If your self assessment bill is more than £1000 you may also have to make a payment towards your 2018:19 self assessment bill on the same day (and another on 31:07:2019). Google 'payments on account's.
    Last edited by Dazed and confused; 31-05-2017 at 8:39 PM.
    • clhs
    • By clhs 13th Jun 17, 2:13 PM
    • 60 Posts
    • 15 Thanks
    clhs
    • #3
    • 13th Jun 17, 2:13 PM
    • #3
    • 13th Jun 17, 2:13 PM
    You appear to have misunderstood the higher rate tax threshold.

    Assuming you get a personal allowance (and don't live in Scotland) then it will be 45,000 in the present tax year before 40% tax starts (11500 + 33500).
    Originally posted by Dazed and confused
    But my personal allowance would have been used up on my first job. And it will put me in the larger tax bracket. So don't I need to accrue 40% tax on the secondary income?
    • Dazed and confused
    • By Dazed and confused 13th Jun 17, 7:16 PM
    • 1,384 Posts
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    Dazed and confused
    • #4
    • 13th Jun 17, 7:16 PM
    • #4
    • 13th Jun 17, 7:16 PM
    If your taxable salary plus any employer benefits (company car etc) and any other taxable income plus your self employed profit takes you over the £43000/£45000 threshold then yes 40% tax would then be due (subject to private pension contributions which can increase how much of your income is taxed at basic rate).

    Maybe I misunderstood the £33500 reference in your original post??
    • rtho782
    • By rtho782 14th Jun 17, 2:28 PM
    • 932 Posts
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    rtho782
    • #5
    • 14th Jun 17, 2:28 PM
    • #5
    • 14th Jun 17, 2:28 PM
    Tax is based on your entire taxable earnings.

    So if your first job pays you £30k PAYE, you can earn another £15k at 20% before you start paying 40%.
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    • antrobus
    • By antrobus 14th Jun 17, 2:47 PM
    • 14,745 Posts
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    antrobus
    • #6
    • 14th Jun 17, 2:47 PM
    • #6
    • 14th Jun 17, 2:47 PM
    ...Having calculated my daily rate, I am thinking of working with the new client for two days per week on a self-employed basis, issuing invoices to the new company....
    Originally posted by clhs
    You might be thinking of a self-employed basis, but it might not be your choice. What does your new 'employer' think about that proposal?

    You might need to Check employment status for tax
    https://www.gov.uk/guidance/check-employment-status-for-tax
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