issues with declaring second income

clouds123

Hello,

I'm new to this forum. Hope I'm posting this at the right place...

I'm employed full time in the UK. I've been doing some part-time work for a company based in another country...and now I seem to be in trouble as I wasn't aware that I should declare my extra income...

The income from my second job is from a foreign company account, and it's not taxed. I didn't know that I should declare my income because I thought it was going to be dealt with by the company (as the way UK companies using PAYE)... Last week I was told by a friend that I should really declare my income or I'll get fined. The problem is, as I was not aware, I did not declare it by the end of the tax year (I think it was May or June this year?). Will HMRC find out that some money has gone into my account from a foreign account? Will I get fined in 2013?

Also, someone told me that it may not be legal to bill a foreign company as I'm not self-employed and I don't have my own limited company. Is it true? If so, what should I do? What would be the most cost-efficient way to go about this?

Thank you very much!

Claudia

anselld

You have until 31 January to file a tax return online for the year ended April 2012.
If you have already filed you can file an amendment to declare the additional income.

Nicola_Ed

clouds123 wrote: »

Hello,

I'm new to this forum. Hope I'm posting this at the right place...

I'm employed full time in the UK. I've been doing some part-time work for a company based in another country...and now I seem to be in trouble as I wasn't aware that I should declare my extra income...

The income from my second job is from a foreign company account, and it's not taxed. I didn't know that I should declare my income because I thought it was going to be dealt with by the company (as the way UK companies using PAYE)... Last week I was told by a friend that I should really declare my income or I'll get fined. The problem is, as I was not aware, I did not declare it by the end of the tax year (I think it was May or June this year?). Will HMRC find out that some money has gone into my account from a foreign account? Will I get fined in 2013?

Also, someone told me that it may not be legal to bill a foreign company as I'm not self-employed and I don't have my own limited company. Is it true? If so, what should I do? What would be the most cost-efficient way to go about this?

Thank you very much!

Claudia

Hi Claudia

Are you an employee of the foreign company or self employed? I am aware this might not be clear - but do you have a contract and get paid regularly or do you get paid on a job by job basis? Also which country is it?

jennifernil

if you are working on a self employed basis, as it sounds like since you are invoicing this company, then you should have registered as self employed with HMRC within 3 months of starting the work. You do not need to have/be a limited company.

Not registering in time could incur a £100 fine.

As you live in UK are are taxable here, you should be declaring this income. You may also be due to pay NI on it. You should register immediately, can be done on-line or by phone.

Has any tax been deducted by the foreign company? Double taxation relief can be claimed if this is the case.

chrismac1

You should be OK, normally the late registration fine is not applied and you won't be filing a late return anyway. Regster online and they don't read the returns properly, chances are no-one will even notice when you began trading.

Ensure you claim all legitimate expenses incurred and keep your Uk tax down.

clouds123

jennifernil wrote: »

if you are working on a self employed basis, as it sounds like since you are invoicing this company, then you should have registered as self employed with HMRC within 3 months of starting the work. You do not need to have/be a limited company.

Not registering in time could incur a £100 fine.

As you live in UK are are taxable here, you should be declaring this income. You may also be due to pay NI on it. You should register immediately, can be done on-line or by phone.

Has any tax been deducted by the foreign company? Double taxation relief can be claimed if this is the case.

Hello! Thanks for your reply.

I'm not really self-employed...I work full-time for a UK company and I pay tax on this income via PAYE. But I'm having trouble with my second income from a part-time job. It's for a Swiss company and it's on a job by job basis. I'm technically not employed by them...

This is why I'm confused. I don't think I'm 'self-employed' and I didn't registered as self-employed... I didn't file anything for this year as I thought the company would deal with it, as UK companies do. Will HMRC find out about this? How would they find out? Would it be possible to wait for the next tax year and say that it's an income for that period?

xylophone

I'm not really self-employed.

I'm technically not employed by them...

http://www.hmrc.gov.uk/employment-status/index.htm

http://www.nidirect.gov.uk/index/information-and-services/money-tax-and-benefits/taxes/leaving-or-coming-into-the-uk/tax-on-overseas-earnings-from-employment.htm

Contact HMRC immediately and sort this out.

jennifernil

clouds123 wrote: »

Hello! Thanks for your reply.

I'm not really self-employed...I work full-time for a UK company and I pay tax on this income via PAYE. But I'm having trouble with my second income from a part-time job. It's for a Swiss company and it's on a job by job basis. I'm technically not employed by them...

This is why I'm confused. I don't think I'm 'self-employed' and I didn't registered as self-employed... I didn't file anything for this year as I thought the company would deal with it, as UK companies do. Will HMRC find out about this? How would they find out? Would it be possible to wait for the next tax year and say that it's an income for that period?

You can be both employed and self employed at the same time. See the links given above.

If nothing has been deducted by the Swiss company, why did you think they would be dealing with your tax?

And even if they did deduct tax, you would still need to declare the gross income here and claim double taxation relief.

If the Swiss company are not deducting Swiss tax then they presumably consider you to be self employed as far as the work you are doing for them.

The advice above by several posters is all good. You are not to late to file a tax return online for 2011/2012. You should NOT attempt to leave this and put the income into next year, HMRC could ask to see your paperwork.

Register NOW as self employed, register NOW for self assessment....it takes a few weeks to get that up and running.

You have till the end of January to file the return AND pay any tax due. The amount to pay will be calculated for you.

You enter your income from all sources, and the tax you have paid via PAYE, and claim any expenses.

The system will take all this into account, and you then pay the tax due.

It is not difficult, so make a start now, don't be tempted to leave it till the last minute!

clouds123

jennifernil wrote: »

You can be both employed and self employed at the same time. See the links given above.

If nothing has been deducted by the Swiss company, why did you think they would be dealing with your tax?

And even if they did deduct tax, you would still need to declare the gross income here and claim double taxation relief.

If the Swiss company are not deducting Swiss tax then they presumably consider you to be self employed as far as the work you are doing for them.

The advice above by several posters is all good. You are not to late to file a tax return online for 2011/2012. You should NOT attempt to leave this and put the income into next year, HMRC could ask to see your paperwork.

Register NOW as self employed, register NOW for self assessment....it takes a few weeks to get that up and running.

You have till the end of January to file the return AND pay any tax due. The amount to pay will be calculated for you.

You enter your income from all sources, and the tax you have paid via PAYE, and claim any expenses.

The system will take all this into account, and you then pay the tax due.

It is not difficult, so make a start now, don't be tempted to leave it till the last minute!

Thank you very much! It's really helpful.

The reason why I thought the Swiss company would deal with the tax issue is that I had always been employed full time by UK companies and I somehow assumed that this is how it works... I know it sounds silly, but I always thought that the money I get in the end is after tax...

With my current salary (from my full-time job), I'm on a 20% tax. But this second income would push me just over the threshold for 40% tax (by about 80 pounds...). Is there a way I could avoid this? I know I should be paying tax on my income, but would it be possible for me to avoid paying double just for this 80 pounds?

Thanks!

cotswoldaccountant

If you do exceed the higher rate tax threshold, you would only have to pay 40% tax on the amount which exceeds the threshold - not the whole of your income. So if it's £80 over, you would pay 40% tax on that £80 only (£32) and 20% tax on the rest of your taxable income.

However, if you are self employed, you can deduct expenses you have incurred from your turnover to reduce your taxable profit. You are taxed on your profit rather than the value of the bills you raised.

Just as an example, if you work from home for the Swiss company, you can claim £4 per week as an allowable expense.

xylophone

With my current salary (from my full-time job), I'm on a 20% tax. But this second income would push me just over the threshold for 40% tax (by about 80 pounds...). Is there a way I could avoid this? I know I should be paying tax on my income, but would it be possible for me to avoid paying double just for this 80 pounds?

Pay into pension?