2nd job - what do I pay?

tarvold

I have a full time job and earn around £35,000 but have also set up a little sideline business which will bring in around £13,000 in my first year.

What are my tax and NI implications?? How do I pay both of these and when do my liabilities have to be paid by??

Also, are there any advantages in creating a limited company for my second job? Would this impact on my main employment?

Any help much appreciated!

somethingcorporate

Your full time job will use your full tax free allowance but will take care of itself as presumably is going to be done via PAYE and sorted by the company that employs you.

You will need to fill in a self-assessment return to declare the income on your second income stream which will calculate any tax liability due - assuming the £13k coming in is income and not profit then you may steer clear of the higher rate (40%) tax threshold but this requires a bit more info on your part.

A company may be the way to go, it depends on what your business is as to what the benefits may be. If it is forever a small hobby then it may not be worth it, if you intend to expand then it may have intangible benefits (such as more credence with your customers) as well as certain tax advantages (for instance paying yourself via dividends is more tax efficient than via salary).

None of this should have any impact on your main job, unless you have clauses in your contract saying you should not have another job etc without permission first or in a competing industry etc, conflict of interest - all the obvious stuff.

CLAPTON

if you have already started your business then you should already have informed HMRC

if £13,000 is likely to be your profit rather than your turnover you should already be paying class 2 NI contributions by DD. (rates is £2.65 per week).

you will need to pay tax and class 4 NI by end of jan 2014 on your profit between april 2012 and april 2013.

assuming you have no student loan repayments then I would sugeest to put aside about 35% of your profit for HMRC