Freelancing & Tax

nikki_angel

Admin - please move if incorrect board!

I have just taken on a remote admin job and I am hoping someone can head me in the right direction for the answer to my query.

I am working for one hour a day (well yesterday was nearly 3 but will only be paid for 1) for five days a week and it is a rate at £6ph. It is on a freelance basis and I am being paid weekly by standing order so a total of £30.

Now, as this is coming straight from the person I am working for, it wont be taxed and my national insurance wont be automatically taken out of it. I obviously want to make sure that I am paying my taxes and NI but how do I go about this? Should I be registering my self as self-employed? As a side note I should add that I am going for a trial at Pizza Hut on Saturday with the hope that it is going to turn into a part time role earning NMW for 16-19 hours a week. So I will be paying NI for that and tax.

Can someone tell me, in layman terms, how I go about making sure that I am paying who I need to be paying the correct monies for NI and tax?

Thanks and sorry for the very long winded post!

Oh, I am 27 next month in case that needs to be answered for the NMW bit.

PlutoinCapricorn

The normal procedure for people who have started freelance work is to register with HMRC as a sole trader. However, having a regular payment from just one source over the long term may not be real self employment: it sounds as though the employer may be trying to escape responsibilities such as sick and holiday pay. Is this arrangement going to last for a long time? Will you be trying to get more freelance work?

If you register, you will need to complete a self assessment tax return some time after April 6th. You will pay the income tax by January 2011. You can claim exemption from Class 2 NI on the grounds of low earnings: you will get a form for this when you register.

fengirl_2

I disagree with the previous answer. £30 pw is way below the tax threshold of £125 pw and the NI threshold of £110 pw, so HMRC would not be interested in you. It doesnt really matter if your employer is treating you as employed or self employed for tax purposes as you are way below the tax limit.
If you get the Pizza Hut job, you will be earning £110 pw (19x£5.80) and with the £30pw, this will bring you into tax, ie £15 of the £30 will be tax free and the rest will be due tax of £15 @ 20%. Assuming you have had no other income this year, you will not be liable to tax at all.
If you get the Pizza Hut job, I suggest you ring the tax office dealing with Pizza Hut (once you have started) and tell them you also have £30pw casual earnings and they will put a restriction to collect the tax in next years code number. Also make sure that you ask them to include the fixed rate deduction for workers in the food industry. in your code.

nikki_angel

Thank you both for your answers. Certainly makes for interesting reading.

I just don't want to not get my NI stamp and I want to make sure that I pay my taxes on time so I don't get any sort of penalty.



I have been receiving MA which ended at the end of December but no other actual earnings to speak of.