IT Support and paying Tax

zone77

Hi all, this is my first post on this forum. I've been a lurker for a while, but never needed to post.

I've been considering offering an IT Support service to people in my area, obviously, there are shops people can go to, and also other businesses, but someone who's local and comes to your house might appeal. I dont expect to make a fortune, but I think if I charge a realistic amount, am reliable, honest and helpful, it could bring a few extra quid into the household.

My main question is regarding paying tax on any earnings I make from doing this. I'm currently employed full time, and pay tax via PAYE. I earn over £28k, so I assume i'm well outside any limits on earnings before paying tax. Having a 2nd job is not against my terms of contract, as long as it's not for a competitor, and seeing as I do IT support for a global mega super corp...it's not a competitor.

Also, my wife is a stay-at-home mum, so her child tax credits are calculated on my earnings.

It's easy to just say "forget it, just do it cash in hand", but really it's not, and getting on the wrong side of HMRC is not a good thing.

Any information or help anyone can offer would be very much appreciated.

Many Thanks

Colin

Debtoxing

Hi Colin,

I gave up work when I had my first son in 2004, but I registered as self-employed and have been doing I.T. work for the same company on an ad hoc basis ever since. In 2006 I decided I needed more money and got a 'proper' job with a local company at the same time. The PAYE tax went from my monthly salary as usual - I just had to write it down on my tax return along with my self-employed earnings, and then I got a letter from the taxman telling me how much I had to pay on the latter.

Don't forget that you can claim all kinds of allowances and expenses back on your self-employed earnings - you only have to pay tax on the profit you make. Have you thought about employing your wife to do your 'administration' for you? Then you can use up her tax-free allowance and minimise your own profits (and thus the tax you're paying as a family).

You need to register as self-employed with HMRC within three months of starting your business or they will fine you. When I registered, I was invited to go on a really helpful course at the local tax office with other self-employed newbies - the staff took us through all the major allowances and explained how to minimise the tax bill. They weren't scary at all! I'd definitely recommend that if you get the chance to do something similar.

I think the web address you need is "www dot hmrc dot gov dot uk", but when I tried to double-check that for you last time I typed this, I lost it all! :mad: And I'm not allowed to post that link properly because I'm a newbie, so I'm sorry about that!

Best of luck with your new venture!


Laura.

googler

Wouldn't employing an administrator open up a whole extra can of worms in terms of paperwork and add to the learning curve?

Our OP would then be (a) employed (b) self-employed and (c) an employer?

Three sets of tax issues instead of two?

I'd ask the OP though -
How many competitors would you have in your target geo area?
How long have they been established?
How would you promote yourself to be first choice above the others?

zone77

Wow, great advice, thanks all :beer:
At the moment, it's all pie in the sky thinking, I havent got as far as checking out competetion, or advertising or anything like that yet. I'd only want to do something as a kind of part time, pop round and help kind of thing. As I said, i'm employed full time already, and this would be a good way to supplement my income from that job.

All I know at the moment, is that if I do anything, i want it to be legit, so I thought i'd better check to see what sort of a pain in the backside the tax situation would be before I even thought about doing anything else.

I know that the area I live in is very well populated by the local naval base, and that there is not an abundance of computer shops in the area. I would hope that with much lower overheads, and working on a small scale much more personal level, I could compete fairly well.

Besides, baby 2 is due immenently, so i've got a couple of months to think things through and do a bit of research before I commit to anything.

Thanks for the advice, i'll look into it and see where it takes me.

Colin

djkarl

I've done this sort of IT Support in the past to supplement my full time income.

I found an advert in the local free newspaper generated quite a full phone calls, if I had pushed I could have probably went full time.

The main problems i encounted were as i was visiting people at home once i'd fixed one problem, they ended up relying on me for everything computer related. That might sound great but they'd want something doing say install a printer driver, then because it had only take me 10 minutes they'd want it for free.

The other type would blame any future computer problems on a change i'd made. I did some house keeping on a guys laptop got it running nice and fast. Couple of weeks later, his PC started blue screening, i had a look and it turned out to be a dodgy memory strip, I kept my nerve but he was certain the fault had been created by me performing the cleanup.

In summary it's a good way to make some extra cash, but some customers will hassle you none stop.

Debtoxing

In reply to the reply about the employee / self-employed / employer thing...!

Just get your wife to register as self-employed too - that way she's not your employee. It would be no different to using any other third party's services (like a printing firm to do your ads, for example). It's just a matter of her filling in a tax return every year as well - if she doesn't go over the tax threshold, it's very simple to complete as you don't have to fret about claiming stuff back.


Laura.

mrkbrrws

If you want to pay something to your wife for administration etc. it would be more appropriate for her to be your employee.

It would not be complicated, you just need to make sure that the wages are not excessive for the work she actually does for you, i.e. not significantly more than you would pay someone unrelated to you. As long as the amount is under £95 per week you just need to keep a record of what you pay, no PAYE scheme is required.

Remember when you register as self-employed you will be expected to start paying Class 2 National Insurance Contributions unless you claim exemption (which you can do if your profit will be less than £5,075 a year).

SplanK

zone77 wrote: »

Having a 2nd job is not against my terms of contract, as long as it's not for a competitor, and seeing as I do IT support for a global mega super corp...it's not a competitor.

Sorry to say - but I think you might find going of what you said WOULD be against the T&C's of your primary job...

IF you become self employed and creating your own business - then that business then becomes a competitor (if doing the same type of work) to your primary job..

I work in IT support looking after about 90 business clients.... there is a similar clause in my employment T&C's. The business I work for does IT support for businesses - but even if I did "freelance" work for home users - it would be breaking T&C's for it...

somebody has done this in the past and was shown the door!

if you still want to go ahead with it - ask your boss about it to be sure.... last thing you want to do is end up with no job at all!