How to declare my tax properly?

shelleywa

Hi,

I work the usual 37.5 hour week at my place of employment. My annual wage is £15K. But I want to earn a bit of extra cash to supplement my income.

My Dad is self-employed and his business is booming at the moment. So much so that he needs an extra pair of hands on a part-time basis. The obvious step would be for me to work for him for some extra pennies. But I'm confused as to how the tax would work for such an arrangement - how can I declare it properly?

The work would be very tempramental, I would be earning a different amount every month and sometimes nothing at all if the work was to dry up for a period of time. My Dad does not have the facility to do my tax forms as an employer - but am I right in thinking that I cannot be employed AND self-employed at the same time? Also, how much would I be taxed on my second job?

Many thanks!

fengirl_2

You can be employed and self employed at the same time and many people are.
First your dad needs to be absolutely certain that your postion with him will be self employed. Its not enough just to say that he cant deal with tax forms, or whatever. He needs to check with HMRC that under the terms he is engaging you that you are truely self employed. If he fails to do this and HMRC come along later and decide that you are in fact an employee, then your dad will be laible for the tax and NIC which should have been deducted from your wages even if you are registered as self employed and have paid your tax.
Assuming that this is cleared up, you need to register as self employed with HMRC as soon as you start work (can do this online or on the phone). You keep records of all your income and expenditure to enable you to produce accounts and after 6 APril HMRC will send you a self assessment on which to show your accounts information. Tax is payable 31 Jan and 31 July in the year following the end of the year of assessment. NIC's will be payable by monthly DD which HMRC will set up for you.

shelleywa

Thanks for this! Do you know if I will be charged the same rate of tax as my permanent full-time job, or if it will be a different tax code for the second income?

:-)

fengirl_2

You wont have a tax code for your second income as you will be self employed and pay the tax due direct to HMRC. You will be charged at 20%.

shelleywa

Fab. Thanks for all your help!

:T

shelleywa

Just out of interest, does anyone know if there's another way to do this, without declaring myself as self-employed? Or is this the easiest/best way?

fengirl_2

Yes, the alternative is to be an employee of your dad. Your code would be BR, or basic rate tax.