How do I pay tax on small extra earnings?

MRB

Hi guys,

I'm full-time employed at the standard rates, and earn over the tax-free allowance.

I also do some work on the side, more of a hobby, but it'll net me in the area of £500 - £1000 a year.

How do I go about declaring that and subsequently paying tax on it? I've tried reading the HMRC website, but... wow!

I have to invoice a company in order to get the extra earnings, so I'm leaving a paper-trail, and the work I do means if I get pulled for a tax discrepancy I'm in serious trouble!

Thanks!

xylophone

Just telephone HMRC.
http://www.hmrc.gov.uk/dealingwith/reporting-changes.htm

whenIretire

Hi MRB

As xylophone says, phone HMRC and tell them that you now do some self employed work in addition to your employed work.

They will then send you a self assessment form out each year.

I'm in the same sort of situation, full time paid and about £2000 from self employed earnings. The first year I had to complete a full self assessment form but each year after that I have only had to do the short version which takes literally 5 minutes to complete.

My PAYE tax code for the next year is then adjusted so that any tax owed is reflected in this so that I don't suddenly have a tax bill to pay. Simples!

Pennywise

If this is just a "second job" kind of thing rather than you actually running your own business (self employment), then you may get away with avoiding having to do self assessment etc. Just phone HMRC and tell them you're now getting some casual wages/income and ask if they can "code it out" into your PAYE tax code. You'll just have to tell them each year how much you've earned so that they can adjust your tax code accordingly.

For such small amounts of money, it's in no-one's interests for you to register self employment and complete self assessment tax returns. If you register s/e, there'll also be paperwork re self employed national insurance etc. HMRC are quite good these days at not making you register for s/e and sa if the figures are small and what you're doing isn't really a business.