Another second jobber - help with tax advice.

goldbyron

Second income - trial and tribulations?
Hi - I was looking for any advice as I am completely clueless as to what to do next.

I am currently employed as a full time social worker and wish to undertake independant assessments outside of my working hours. I currently earn 35k basic with 2k retention bonus and 4k with extras (assessing social work students and out of hours duty). I am able to earn up to 2k per assessment with private agencies.

I was wondering the following:

1. Can I work outside my hours? My borough states we have to request permission to do this however I don't want to ask to be refused. Is it too risky to not ask for permission? I suppose I find it unfair they can dictate how I choose to spend my 'leisure time'.

2. Do I have to establish myself as a LTD company and complete self assessments in respect of tax etc?

3. Do I need to open a specific business account or can I just use my personal account?

4. Do I risk getting caught in the higher tax bracket and would this be worth my while?

Thanks for any advice.

JimmyTheWig

goldbyron wrote: »

1. Can I work outside my hours? My borough states we have to request permission to do this however I don't want to ask to be refused. Is it too risky to not ask for permission? I suppose I find it unfair they can dictate how I choose to spend my 'leisure time'.

Unfair or not, that's their rules. It's not worth risking your job over. Ask permission, and if they refuse don't do it.

2. Do I have to establish myself as a LTD company and complete self assessments in respect of tax etc?

I don't see any need to register as a limited company. Just register as self-employed. Yes, you will need to do a tax return. These aren't difficult.

3. Do I need to open a specific business account or can I just use my personal account?

You need to be able to show money coming in from your self-employed work as seperate to other money coming in. The easiest way to do this is with a different account. But this doesn't have to be a business account.

4. Do I risk getting caught in the higher tax bracket and would this be worth my while?

Note that tax brackets only apply to the portion of income in that bracket. So if you earn £1000 over the threshold then you will pay 40% on that £1000 and 20% on the rest.
Sounds like you will be nearing this bracket. Depends on pension contributions, etc. My point is that the worst case scenario is that all your self-employed income is taxed at 40% (meaning you'd get £1200 for a job rather than £1600 if taxed at basic rate) but it won't increase the tax you pay on your salary.

Rolo_Tomasi

In answer to your queries:

1. I think you have to consult your employer as by not soing so you would be in breach of your employment contract and as such if they eventually found out what you were doing you could face disaplinary action from them.
2. You could either operate as a Limited Company or a sole trader. For a (relatively) small second income it is probably not worth the extra administration/costs of running a company so I would recommend sole trader status.
3. There is no specific requirment to open a business account but you will find the admin much easier if the income and expenses of the second income go through a seperate account.
4. You are already very close to the higher rate (40%) tax threshhold and therefore much of what you earn through your second job will be taxed at 40%. Whether or not this makes the extra work worth your while depends on you - If you do an assessment for £2k, after tax you will be left with £1200 but for this you are giving up your free time.