paye AND self employed tax

igadhia

hello,

I have a quick tax questionas I have heard conflicting stories on this board and just want to get this clarified.

I am currently employed and paying PAYE in the higher tax bracket

I am also doing about £8-10k per annum worth of sales outside of this for which I have set up a sole trader account and filing vol. NI contributions and the like.

As for the tax implication on this £8-10k ...

First I heard it will simply get added to my salary and deducted at 40% as if it was the same

then I heard that in fact becuase this is 2nd income it will get taxed at the basic rate (21%?)

Please could you clarify, I want to see if it worth transferring the ownership of this part to someone else in the household where I would lose 21% rather than the chunky 40%

thanks so much

Aark

If your employment is putting you in the higher rate tax bracket then any additional income will be taxed at your marginal rate i.e. 40%.

sarah_elton

I'm in a similar position, with PAYE full time, plus self employed on the side.

I was told by the Newly Self Employed HMRC helpline the same thing - that self-employed income doesn't count "on top of" other income, so I'd only pay basic rate.

I doubted this, and work in a dept. of accountants, who all said that was rubbish - it's additional income so will be taxed at the top rate you're paying.

Not sure if the HMRC are giving out duff advice?