PAYE or Self Employment?

Savvy_Sue

oldnick wrote:

An obvious disadvantage is that as you have other income the company would be obliged to deduct tax at basic rate ie 23%.

However, if this is your only or MAIN JOB - which presumably it would be - then your employer would offset your Personal Allowance (currently just over £5000 pa) against your income before deducting any income tax. Note that the question asked on the P46 (which is the form you need to complete for a new employer if you're not handing over a P45 issued within the current tax year) refers to your JOB, not your self-employed status. So my understanding - which sarahlouise will kindly correct me on if I'm wrong! - is that for the purposes of this question, you can ignore any other income.

You would, of course, need to set aside 22% of your S/E income against your future tax bill, but putting it in a savings account would at least earn you some interest!

Also I'm not saying this in an effort to get people paying less tax. It doesn't make any difference, at the end of the tax year, whether your income came from employment or self-employment. If you didn't pay any tax on your employment, you declare it on your tax return with your self-employed income. If you did pay tax on your employment, ditto. Then you work out whether you've paid too much or too little tax. But if you've paid too little, you'll have (hopefully!) had the good sense to squirrel it away and get some interest!

oldnick's last paragraph is basically correct about holiday pay: you can't always have PAID holiday until you've worked a certain period - exact period depends on the contract. Can be as little as 3 months, or can be that you can't take more leave than you've accrued initially, so that, for example, once you've worked 3 months you can take 10 hours leave, but not 20 hours leave, because you've only 'earned' a quarter of your annual leave entitlement. I did know about payment for Bank Holidays but decided not to complicate things too much ...

hilary1

Also I'm not saying this in an effort to get people paying less tax. It doesn't make any difference, at the end of the tax year, whether your income came from employment or self-employment. If you didn't pay any tax on your employment, you declare it on your tax return with your self-employed income. If you did pay tax on your employment, ditto.




I actually have to complete different forms for employment and self-employment, and worse still a different form for each emploment ie mystery shopping, 2 different p/t jobs. Not difficult though, just use your P60s

Easy if you keep your paperwork up to date all year and not just stuff everything in a bag.

theanimallover

Thanks all of you for your replies!
I do work in other jobs too and my rate isn't very high infact I was earning more money 7 years ago!
I'm only just over the minimum wage with one...but from the feedback they find me quite an asset - so hopefully in time I can raise my rate (when they can't do without me!!).

I do need to put some money aside to pay the tax bill at the end of the year, I haven't started yet - I'm just about getting by paying the bills each day as it is! But I know it is something I must do, so next pay I will.