Odd Jobs and Tax

former_student

Hi All,

From time to time I may get asked to do odd jobs by people e.g. mowing a lawn or taking rubbish to a skip. I may get £10 to £15 for my time, where do I stand in relation to paying tax?

I have a regular full time job and as I said the above odd jobs are infrequent.

Thanks in advance.

former_student

Any takers on this?

Thanks.

no-oneknowsme

To do the "right" thing , you should be declaring any money that you receive to HMRC .

As you state you have a full time job im assuming that you are making use of your personal allowance in that job which means that your odd jobs would be liable to taxation at 20%.

In reality though (and im not saying that this is right!) many people would take the money from the infrequent odd jobs and stick it in their pocket and forget about it.

Its entirely up to you which option you wish to take.

macman

It doesn't matter if the jobs are infrequent or not, any income you don't declare is tax avoidance.

CLAPTON

how much are we talking here for a full year?

zygurat789

macman wrote: »

It doesn't matter if the jobs are infrequent or not, any income you don't declare is tax avoidance.

No it's tax evasion, avoidance is legal.

pinkteapot

As others have said, you should (in theory) register as self-employed. This is really easy to do:

1) Tell HMRC that you are a sole trader. See info here:
http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073789606&type=RESOURCES
They will then start sending you tax returns. There is a self employment page to fill in and you need to write down the total takings for the year, total costs, and then profit/loss. You will pay income tax on the profit/loss. You wouldn't get any tax free allowance on this as you are employed and use it there, so the income would be taxed at the highest rate of tax you pay on your employed income.

2) Tell National Insurance that you are self-employed:
http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073790800&lang=en&r.l1=1073858808&r.l2=1073859218&r.l3=1073867963&r.s=sc&type=RESOURCES
You will immediately have to start paying Class 2 National Insurance Contributions (currently £2.40 a week). However, if your profit for the tax year will be below £5,075, you can apply for a Certificate of Small Earnings which exempts you from having to pay this. See 'Small Earnings Exemptions', here:
http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073790854&lang=en&r.i=1073790800&r.l1=1073858808&r.l2=1073859218&r.l3=1073867963&r.t=RESOURCES&type=RESOURCES&lang=en

And that's all there is to it!

However, lots of people do odd jobs for friends/neighbours in exchange for some beer or a tenner and don't report it to HMRC.

One issue - if you become self-employed you have to tell HMRC within three months of starting or you pay a fixed fine (it was £100 when I went self-employed about 8 years ago). So if you have been doing this a while and 'fess up to HMRC you'll probably get stung for that.

If it was me and the work was becoming more regular, I'd tell HMRC I'm self-employed and starting business now. I wouldn't tell them about the odd tenner from recent times because of the fine it will incur. But this would be illegal, just to be clear.

macman

zygurat789 wrote: »

No it's tax evasion, avoidance is legal.

Thanks for clarifying that point, it does seem to confuse a lot of people (including those whose wives are resident in Monaco for tax purposes)

Artaxerxes

former_student wrote: »

From time to time I may get asked to do odd jobs by people e.g. mowing a lawn or taking rubbish to a skip. I may get £10 to £15 for my time, where do I stand in relation to paying tax?

I have a regular full time job and as I said the above odd jobs are infrequent.

Thanks in advance.

As others have stated it depends on your definition of 'infrequent'.

Another consideration is that you state you 'may' get paid, does that mean you sometimes don't?

Nothing in the statutes says what a trade or profession is, and judges have spent a huge amount of time over the past 100 years considering exactly that. Boiled right down, the test is whether you have arranged your affairs with the primary aim of making money, or whether such money as you receive is just incidental to your private life.

And even if you did decide such money received was taxable, you could set off any associated costs (say, driving to the skip). It's your call, but to be honest I think HMRC have bigger fish to fry.