Employed & Self Employed & Tax

j0n3s3y

Hi,

Myself and a friend are both employed full time and were based in the IT industry and we have decided that as we get asked to do foreigner work quite often, that we would do it legitimatley, so we have set up a bank account in a business name as an informal partnership, we have an amount in cash from work done recently (£4K approx) which is sort of split between us.

What we'd like to know is what we are liable for in tax. As were employed, do we also have a self employed allowance - or does it just add on to our employed income?

If the money is left in the bank account and we do not draw it, do we have to pay tax on it personally as we do not draw it as an income?

At what point do we pay tax on our self employed work?

We do have a meeting with a tax man in a couple of weeks but just want to know a few things beforehand from people who do this day in day out.

Cheers

chriiiiiiiis

You should have always been doing it legitimately.

You'll need to register as a partnership. You'll have to file Individual Tax Returns each year, and one of you (the nominated partner), will have to file a Partnership Return.

You're liable to pay tax on your self employed profits - even if you don't touch the money.

If you exceed your tax free allowance at your full-time employment, then your profits will be charged at 20% tax (40% if you already pay higher rate tax).

Class 2 NIC may also need to be paid, as well as Class 4.

In a nutshell.

Lots more useful info here:

http://www.hmrc.gov.uk/sa/self-emp.htm

http://www.hmrc.gov.uk/sa/parts-partners.htm