Small Biz tip's and pointer's please...

Fonelee

Hi All,

First post on MSE so thanks for your possible input.

I am trying to help my wife straighten out a bag of snakes which I hope someone may be able to help with or point me in the right direction.

Basically post maternity leave my wife has managed to land a contract with her previous employer for a guaranteed set amount of hours freelance work a month and as such is trading as a sole trader for these purposes.

Also she has started a second job working as a function manager for a local wedding venue for a few days a week and is paid by the employer like any other part-time worker.

So my enquiry is can anybody shed any light on where she stands for tax/NI purposes, VAT etc .

This is very confusing being both employed part time and working for yourself.

Any info would be great or any 'have a look at' pointers would be greatly appreciated.

Lee.:rotfl:

seismicryan

From what I understand having spoken to my accountant, if she is working a set number of hours for an employer each month as freelance, then its likely the Tax Man will basically tell the company that she is an employee and they must handle the Tax and NI and she will be a PAYE employee..

somone else here may be able to elaborate on that if they have been in a similar situation..

Ryan

Savvy_Sue

I agree with seismicryan: the company probably wants her to be 'self-employed' because it saves them paying holiday pay, sick pay and NI, even if they are paying her more as an hourly rate than they would expect to if she was employed. But the decision properly belongs to HMRC. It's the employer who pays if they've got this wrong, but that's still something worth knowing.

However, if she is both self-employed and employed elsewhere, it's all quite simple:

1. The company where she is employed part-time treats her as any other part-time worker, deducting tax and NI from her earnings as appropriate. She keeps her payslips, and especially her P60 at the end of the tax year.

2. She registers as self-employed with HMRC. She should do this immediately. They will send her a tax return next March / April, and she will complete that with both her employed and her self-employed earnings (the latter is her profit, having taken off any allowable expenses). She should put aside 25% of her self-employed income towards her tax bill - it should be less than that, but over-estimating what you owe is better than under-estimating.

3. If she expects to make a profit of less than (about) £5000 per year from self-employment she should ask HMRC for a Small Earnings Exemption, or she will have to pay Class 2 NI, for which they will expect her to set up a DD. There are a few situations in which it's worth paying this if she doesn't have to, especially if she's not paying it in her job, and especially especially if she's not paying it in her job AND not claiming Child Benefit in her name for a child under 12 - see here.

3. VAT: unlikely to be relevant because you have to have a turnover of over something like £70,000. If she's doing that on a part-time basis, let us know the secret ...

seismicryan

What Sue said ^^^^^ :beer:

Ryan

Fonelee

Thanks for the responses everyone. I will read them in depth this evening.

Much appreciated!:j

Fonelee

Thanks again for the replies your info has been a great help.

With that info I think we have the bases covered.

1. Part-time Job carry on as usual with them sorting her tax and NI etc... :starmod:

2. Have registered as self-employed with HMRC. Awaiting reference and expecting paperwork in march/april and will set aside 25% of income... :starmod:

3. Think she will be under £5000 profit so will look into Small Earnings Cert... :starmod:

4. And VAT I won't worry to much about cos if she is earning 70 grand a year then I will be packing my job in...

Again much appreciated with your feedback feel a great deal clearer on the situation.

Lee.

martindow

Fonelee wrote: »

4. And VAT I won't worry to much about cos if she is earning 70 grand a year then I will be packing my job in...

If she is going to get work with VAT registered businesses rather than unregistered businesses or individuals it can be worth registering voluntarily as it will make no difference to them if you charge them VAT or not. Your wife could then set off the VAT element of any expenses incurred.

Don't take this as advice to pack your job in!