Need advice on tax code with new job & self employment

Scaredy_Cat_3

Hello

I hope someone can explain this to me please. Since about September last year I've been registered as self-employed doing mystery shopping (not earning much so no tax payable but had to do the self assessment form to keep it legit). Prior to that I had been out of work for a while.

Just started a part time job last month and am still getting taxed on emergency code BR. Spoke to Tax office who tell me they are in the middle of a nationwide update and cannot action any changes at the moment. However, they said ring back next week and they can then log that this new job is my only employment since April (at the moment they have it listed as a secondary employment as they already know about the self-employment).

So, I'm a bit confused about where I stand. I was hoping to continue with the self employment, although I wouldn't be doing as much as I don't have as much free time as before. Is it really going to confuse matters if I continue to be self employed as well as employed?

If I do continue with the self employment, how do I sort out the tax? I had assumed I would pay PAYE in my 'proper' employment and then complete a self assessment form for the extra bit? What impact will it have on my tax coding if I tell the Tax Man I am continuing with self employment?

PlutoinCapricorn

Many other people have a job -full or part time- where they pay tax under PAYE and are also registered as self employed as they do bits of other freelance work here and there. So you can stay registered as self employed: just fill in the tax returns, there will be no confusion for HMRC.

You will have received a tax form for the tax year April 6th 2008 to April 5th 2009. The self employment work from September will need to be declared on this, even if you have not earned enough to pay income tax.

Your new job and also any new self-employed work will need to be declared on the return for tax year 2009/2010, which you will get next April. If you have paid too much tax overall, this will be picked up then.

However, you want to be charged the right amount of tax now and not wait. Did you fill in a P46 when you started the part time job? They should have given you a Tax Code of 647L not BR. HMRC are very busy right now.

Scaredy_Cat_3

I have already completed and filed my tax return for 2008/09, did it online in April. At the time my only income was from the self employment.

The man I just spoke to did say I should be on 647L but at the moment they have my job listed as secondary employment. He said if I ring back next week and tell them this is my only employment since April they will put me on 647L. He didn't tell me what would happen if I said I was still self employed and he sounded a bit 'off' so I didn't feel comfortable asking.

Are you saying (sorry if this is a dim question) that I will pay PAYE as normal on my employment and then still receive a tax return next April, and on that I declare BOTH the employment and the self employment, even though I have already paid PAYE on the job?

Any

PlutoinCapricorn wrote: »

However, you want to be charged the right amount of tax now and not wait. Did you fill in a P46 when you started the part time job? They should have given you a Tax Code of 647L not BR. HMRC are very busy right now.

I think that is why they gave he BR.
Because she has other income that is already eating up her tax free allowance.. Or so they think.

Any

Scaredy_Cat wrote: »

I have already completed and filed my tax return for 2008/09, did it online in April. At the time my only income was from the self employment.

The man I just spoke to did say I should be on 647L but at the moment they have my job listed as secondary employment. He said if I ring back next week and tell them this is my only employment since April they will put me on 647L. He didn't tell me what would happen if I said I was still self employed and he sounded a bit 'off' so I didn't feel comfortable asking.

Are you saying (sorry if this is a dim question) that I will pay PAYE as normal on my employment and then still receive a tax return next April, and on that I declare BOTH the employment and the self employment, even though I have already paid PAYE on the job?

NO, what you do, you declare TOTAL INCOME (self-employed and employed) and also input TAX ALREADY PAID through PAYE and then it will calculate only the tax outstanding.

Any

I think you need to tel HMRC when you call them which is your MAIN job.
The employed is your MAIN job and the main job will get the tax free allowance tax code.

Then you will pay tax on Self employment on the end of the year.

fengirl_2

The problem here is that you have told your employer that this is not your only or main job, hence code BR (which is NOT emergency code). You now need to cut out the middle man, ie HMRC by asking your employer for another form P46, which you sign to say this is your only or main job. Your employer will then put you on code 647L week 1 which is emergency code and better than BR. You will then have to wait for HMRC to plough through their mountain of post in order to catch up and issue 647L cumulative to your employer so that he can refund the tax overpaid. The important thing is that you will be better off in the meantime.

PlutoinCapricorn

Just to confirm, when you fill in the form for tax year 2009/10, you will need to give the PAYE figures (Gross Income, Total Tax Paid) for your part time job, although they will have already had this from your employer. There is one section for employment earnings, and another for the self employement income.

If you have your P60 for 2009/10 with you, it will take just a few seconds to complete the employment section.

Scaredy_Cat_3

fengirl wrote: »

The problem here is that you have told your employer that this is not your only or main job, hence code BR (which is NOT emergency code). You now need to cut out the middle man, ie HMRC by asking your employer for another form P46, which you sign to say this is your only or main job. Your employer will then put you on code 647L week 1 which is emergency code and better than BR. You will then have to wait for HMRC to plough through their mountain of post in order to catch up and issue 647L cumulative to your employer so that he can refund the tax overpaid. The important thing is that you will be better off in the meantime.

I'm not disputing what you've said, but I don't think my employer knows about my self employed earnings... not payroll anyway. I did mention it at interview but I haven't put anything in writing to payroll about it. Officially I was out of work for a few years but had just recently started a bit of freelance work, it wasn't even on my CV or my application.

I got the impression (rightly or wrongly) when I was on the phone to the Tax office that they (the Tax office) had made this assumption that my new job was secondary employment because they had received a self assessment tax return from me in April (prior to me starting the job). He mentioned the form. It all seems a bit ludicrous if that's the case given that I'm now earning a proper part time salary whereas the self employment earnings (which they will see from the Tax Return they already have) was peanuts.

Any

Well, you need to speak to payroll.
They might not know what they are doing. Did they not give you any forms to complete?
I suppose you did not give them P45. Did they not give you P46 to complete?
This more looks like the payroll screwed up..
If you only started, the HMRC wouldn't issue a code this quickly. Especially as they are on system changeover.

Scaredy_Cat_3

Not sure I can remember who did what and when, I'm afraid. I started a month ago and they did send me a P46 but I didn't fill it out because I found (and sent) my P45 instead. It had to be posted to payroll who are based in another part of the country.

When I rang payroll this morning it was them who told me to ring the Tax Office.

On advice from here, I've completed the P46 now, and will post that to payroll today - then ring Tax office on Monday and tell them to make this part time job my main employment. Hopefully that will sort it out.