One Off payment

ceeforcat

These things only happen at this time of the year.

I have a client who earns around £100000 per annum on PAYE. Every year she also has a few instances of earnings where she is paid gross - usually around £150 per annum- for lecturing in dietetics (whatever that is). I always declared this as 'other untaxed income'.This year she has just informed me that she received a one-off (absolutely definitely) payment of £9000 for a research project into diabetes. She had believed that this was taxed under PAYE - it wasn't. Anyone any thoughts as to whether this can be declared in the same manner or is self-employment income, as I have informed her, the only method to treat this income?

ceeforcat

Anyone? chrismac1?

I should add that this lady fully expected to be paid under PAYE and moreover, did not expect to be paid until the research was completed which will be in April 2012.

BoGoF

What sort of timescale was the work carried out, days? weeks, months?

Was there any written contract?

Mikeyorks

Surely it comfortably exceeds the £2500 for 'other income' under PAYE? Whilst that is intended for non-employment income - I have seen evidence that HMRC will code out smaller amounts of 'self employed' income. But £9k is pushing it!

http://www.hmrc.gov.uk/incometax/ways-to-pay.htm#5

ceeforcat

No, I received any income that I’m going to receive in Dec 2010 – a once-off and final payment. The work itself started before then, and ended Dec 2011; I may even have to spend some time on it in 2012. But no more money is due from them. I would have been happy to receive payment when the work was done but they wanted it paid by end 2010.

Direct quotation from client - Mike there is no question of wanting it to be coded out - I am just trying to see if there is a way around registering her as self-employed when she does not appear to be and has no wish to be so.

Pennywise

Surely it would be best shown as self employment which opens the flood gates to claiming expenses against it. She must have done some substantial work to write a report to that value, at least, computer, printer, home office, home utilities, stationery, telephone, internet, maybe some travelling, buying books, journals, literature, training, etc? I'm sure you could get a thousand or two of legitimate expenses to set against it if you apportion her costs between business and private for the period it took to do that work.

ceeforcat

Total expense £585.12 - all done from her PAYE office. I do believe that I will have to show it as self-employment - that means Class II and Class IV NIC as, obviously, it is too late for deferment for that year. Nasty - but I see no alternative.

ceeforcat

AHA!!!! HAPPY DAYS!!! (Thanks for all your responses).

For these circumstances, where it is not an ongoing source, the guidance for a return advises you to enter the freelance income in Box 16. Box 17 allows you to claim any expenses against the income.
You will need to make a voluntary return but can avoid the need to register and join self assessment

http://www.hmrc.gov.uk/helpsheets/hs325.pdf

Mikeyorks

ceeforcat wrote: »

Direct quotation from client - Mike there is no question of wanting it to be coded out - I am just trying to see if there is a way around registering her as self-employed when she does not appear to be and has no wish to be so.

Fine that you have an acceptable answer. The point I was making is that it can't realistically be PAYE - ergo it has to be SA?

But pleased you can do it as a one off.

ceeforcat

Mikeyorks wrote: »

The point I was making is that it can't realistically be PAYE - ergo it has to be SA?

Until this thread I was of exactly the same view - thanks!