Second income tax advice

aldridgeboy

Hiya
I'm after some advice please.

I have a public sector job that I pay PAYE earn tax and NI contributions/pension contribrutions etc with no issues. I earn £38,000 and a couple of grand a year overtime on top of that .

I have just started to do some lecturing for a company for which I earn £150 a day plus traveling expenses. This will probably average at one day a month. I also am just about to start earning a little amount by being a magician! Strange mix I know!

Basically I have no idea about paying tax on the extra income and would love some pointers. Am I classed as self employed in the other jobs? I lecture for a company who I invoice following each lecture and they issue a cheque. The magician side is going to be totally by myself.

Do I just keep a spreadsheet with income and outgoings throughout the year, and then fill in the self assessment tax forms next year? Can I " Lump" the two extra sources of income together? Do I have to become a company or anything?
On the magician side I spend quite a bit of money ( at least £100 a month) on new tricks and equipment, and travel quite a bit to go to magic clubs and lectures etc.Can I claim these back against any tax I might have to pay? Does everything have to have a receipt to be claimed? With fuel for example, I normally fill up once a week so have a receipt for £80. If I do 100 miles that week to go to a lecture etc, do I need to put a receipt in just for that amount?

I have been to a convention this year and whilst I have receipts for all equipment bought, I didn't get one for the actual convention and B&B ( about £150). Does this mean i cant claim them?

Sorry if this is uber basic but having always paid PAYE I m clueless!! Any advice would be gratefully received

ceeforcat

Firstly you need to register for self assessment. When HMRC conjure up (!) a reference number you will have to compete two separate self employed pages although, given the income involved, it should only be a matter of declaring total income and total expenditure.

The costs of the new tricks should be deductible as will travel, stationery, insuarance (in case the sawing lady in half goes awry). Keep all receipts. The convention should be allowable too, accomodation not so. For travel by car, I would use the standard allowable mileage rates of 45p on the first 10000 miles.

Might be worth considering an accountant at least for the first year at least in order that you may learn what exactly is allowable before, hey presto, you can do it yourself!

aldridgeboy

Ha ha thank you for that!! That really helps

PlutoinCapricorn

If you have income from work that is not taxed under PAYE, you do need to register as a sole trader - not much point in creating a limited company at this point.

Start by going through https://www.businesslink.gov.uk, then https://www.hmrc.gov.uk where you can register online.

You do need to do some groundwork, and think about things such as insurance. Will you trade under your own name for everything, or use a special name for the magic work? For anything other than your own name, you need a special bank account.

As your income streams are so different, it is best to keep separate records. You can get free courses on record keeping an completing tax returns, and many people on here will be able to help with specific points.

jimmo

Starting with the lecturing work has the company said whether you will be employed or self-employed?

If there is any doubt about that it would be useful to have some idea about how your lecturing fits into the company’s business.

For example, in universities lecturers who teach core subjects in a degree course will be employees of the university but guest/ occasional lecturers in very specialist subjects are far more likely to be self-employed.

http://www.hmrc.gov.uk/manuals/esmmanual/esm4502.htm

Whilst it would be better to look at travelling expenses once it is known whether you are employed or self-employed it is worth asking now whether you will be travelling to the same place each time you do this work or will you travel to a different venue each time?

On the magician side it appears that you have not yet commenced trading (in very basic terms you do not yet have your first paying customer). If that is so then any expenses you have incurred to date will be pre-trading expenditure claimable when you start trading, not before.

Buying new tricks and equipment should be OK but your travel to magic clubs and lectures begs the question of whether you were learning the business.

Take a look at chrismac1’s post in this thread.
https://forums.moneysavingexpert.com/discussion/3769961

It looks to me to be very likely that in your early years of trading as a magician you are going to declare losses and you will have the choice of carrying forward those losses to set against future profits from that business or setting the losses against your other income. The latter is probably the MSE way to go but it carries a significant danger that the taxman will suspect you of trying to subsidise your hobby by claiming tax relief for those losses.

getmore4less

Check your contract of employment for your obligations regarding other work.

aldridgeboy

Jimmo
Thanks thats really good advice thank you. I m not actually sure if I m employed or self employed..I guess i need to find that out. there is no contract anyhow so i m guessing its self employed.

The lecturing is different places in the main. Some places will be used on more than one occasion, but we travel to oranisations to deliver the training as well as delivering it at our location.

Pluto I wont have a special name for the magic, just my own name. I have a second current account that I use as a slush fund and was going to use that for any earnings

jimmo

aldridgeboy wrote: »

Jimmo
there is no contract anyhow so i m guessing its self employed.

I am afraid you should expect HMRC to think the exact opposite.

In these situations the primary responsibility for determining whether an employment exists or not is the payer’s.

If an employment exists, the payer is required to operate PAYE.

If the payer fails to operate PAYE then it will be required to make good the tax and National Insurance it has failed to deduct, pay any interest arising and will be liable to a penalty.

Certainly under Tax Law, the payer (employer) has no right to demand reimbursement from the payee (employee).

The more usual situation is that a contract is drawn up stating that the payee is self employed and responsible for his own tax affairs but also containing a clause (in the small print) to the effect that if the payer is caught by HMRC, the payee will cover the taxman’s bill. That clause comes under general law, not Tax Law and, as far as I know, is probably enforceable.

HMRC do provide an Employment Status Indicator. I would suggest you start here, take as much time as it takes and work through to the Employment Status Indicator Tool.

http://www.hmrc.gov.uk/working/intro/empstatus.htm
　

Whilst I think we are not yet ready to move on to the question of travelling expenses I note your comment “
delivering it at our location.”

In very, very rough terms if you are self employed, I would expect “our location” to be a room in your home, or business premises for which you have financial responsibility.

If you are an employee I would expect “our location” to be your normal place of employment and therefore a place you commute to rather than travel on business.

Speaking from my world, I see your venturing into the lecturing work without a contract as the equivalent of buying a car for cash from a bloke you met down the pub. Either you will get a really good deal or you will be stitched up like a kipper.

Livethedream_2

Go get an accountant - you should expect to pay around £200 for the service for this sort of small related business.

Both would be seperate.

I do a lad whose on CIS Tax and also a magician and heat the moment makes a loss from the magic due to the tricks etc so that offsets nicely to his profits.