Trying to earn extra but is it worth the hassle with the tax

miss_shillingworth

I started private tutoring this week(through an agency) 2 hours a week after work. It's an attempt to earn a little extra on my relatively low income.
The tutoring pays £25 per hour, £6 of which goes to the agency. On top of this I have to pay national insurance and income tax (have to contact tax office to arrange). OH not happy - says its a lot of bother arranging to pay the tax/NI and the tax will be 30%. I guesstimate this will leave me around £12 for each hour after the Class 2 national insurance is deducted.
Trouble is, the tax is paid on the work done - which is term-time only - but I understand the NI is every month regardless. That means for about 3 months I'll pay extra NI on money I won't be earning.
Am I mad?
Also, can I opt to pay income tax through my PAYE on my "proper" employment or would the tax be deducted throughout the year as well?
Would I get any overpayment back at the end of the financial year? Does it just complicate everything?
Am I mad?:think:

CommitedToChange

Er, most of that is wrong - please go on the governments tax website and read up on it. You can call the NI office as if you're already paying on PAYE you don't have to pay weekly as well. You may pay a top up NI after you complete a self assement form.

While you should put 30% of your earning away to cover your tax bill (better too much than too little) - you won't pay 30%, you'll pay the regular tax amount (20%ish) unless you earn over the limit when it will go up to the higher earner category - but only for the amount over that limit.

You will have to fill in a self assessment form each year - but this is quite simple. You can also go on free courses to get this explained, just been on one and it was very useful.

I'm sure someone will be along shortly to explain this better - but its worth doing if you're on a low income as you will see the benefit.

lozza1985

Definately ring the tax office, you shouldn't have to pay ni twice, if you pay it once that's enough, that's what I was told when I registered as self employed for avon, as I already pay ni for my full time job. If you ring up they are really helpful in my experience and explain things quite clearly.

BeautyandtheBeast_3

there is something about being self employed and not paying NI on the first £5k - dont fully understand it myself but maybe worth looking into. xx

scotsbob

If the tutoring pays you £25 an hour, how much are the students paying the agency?

Maybe you should be cutting out the agency and doing deals with the students.

fengirl_2

First of all, you only pay tax on your PROFIT, not on your turnover. Therefore you need to keep an accurate record of all your expenses in connection with this work and include them in your end of year accounts. This will include agency fees, stationery, books, use of home as office, capital allowances on computer and travel to and from cleints' homes.
If your profit is under £5035 you are exempt from class 2 NIC's. If your profit is under £2500 a year, you dont self assess, you just inform your tax office that you have had £xx in fees in the year and they can include a restriction in your code number to collect the tax if this is what you want. Or you can keep the two separate if you prefer.

miss_shillingworth

Thank you one and all for your information - this makes some sense and I will contact the tax/NI office to sort it out.
I can deduct my travel and cost of resources, but I don't know how to calculate using home as office! I just sit at the laptop for a number of minutes a couple of times a week.
The £25 is what I collect from the student's parent and I pay over £6 of it to the agency, leaving me with £19. This is the amount on which I base my calculations.
Thanks again.:)