Tax on 2nd Job

Sammie_in_the_City

Hi everyone

I was looking into doing some part time work in addition to my full time job and was wondering what the deal is with tax in these circumstances? I would be looking at freelance work so that makes it slightly more complicated in the fact that i'd be technically self employed.

Does anyone have any information or experience in trying to keep the tax man happy?!

Any help appreciated!
Sammie

PlutoinCapricorn

"2nd job" is slightly misleading! Tax on freelance work is normally 20%, unless it takes you into the 40% band. The tax is on the profit: freelancers can use legitimate expenses to bring this down.

You do need to look into several things and make some decisions: https://www.businesslink.gov.uk is useful here. Sole Trader is best, unless there ia a good reason for having a limited company.

If you wait to start work until after April 5th, it gives you an extra year to learn the basics. You need to complete a tax return once a year, and pay tax in one or two installments.

A lot depends on exactly what you will be doing.

Sammie_in_the_City

Sorry, yes, 2nd job is a bit misleading...its more like odd bits of work here and there!

Thank you very much for the link - I shall check it out. :j

I knew the tax man would be after some sort of percentage!!

PlutoinCapricorn

Unfortunately you only get one Personal Allowance, so HMRC certainly will want 20% of your freelance profit.

You also need to think about National Insurance: Class 2 is normally payable, unless you claim exemption on the grounds of low earnings - approx. £5,000. There is an 8% Class 4 levy on profits over roughly the same amount. But if you are not completely self employed, you may escape both.

Is there anything in your contract of employment about taking on additional work? Is there any danger of conflict of interest? Your employer might be worried that you would be too tired or distracted to concentrate on your main job, or might abuse the facilities.

You might need specific insurance: this depends on what you will be doing.