Doing freelance work in spare time

chrisv24

Hi,

I hope this is the right section.

I work full-time in marketing and get my salary paid every month as normal. I do a little bit of freelance work but am thinking about doing more so know I need to register for tax on this additional income.

How do I do this and will it affect the way I get paid at work?

Thanks

PlutoinCapricorn

Many people are in this situation.

The best thing is to register as a Sole Trader: starting a limited company at this early stage is overkill. If your official start date is after April 5th, you get a whole extra year to learn all about tax, insurance etc. You can choose to pay tax on the freelance income completely separately from your PAYE tax, and your tax code will stay the same.

What does your contract of employment say about taking on extra work?

InsideInsurance

chrisv24 wrote: »

I do a little bit of freelance work but am thinking about doing more so know I need to register for tax on this additional income.

How do I do this and will it affect the way I get paid at work

You are already a sole trader so need to register with HMRC ASAP to avoid any possible penalties depending on when you started doing this freelance work.

https://www.gov.uk/set-up-sole-trader

It wont effect how you are paid at work but you should ensure your contract of employment doesnt prohibit these activities - though simply registering to pay your dues to the tax man will be invisible to them

tiger_eyes

You may need to pay National Insurance on your self-employment profits - I pay class 2 and class 4. I'd also second what previous posters said about getting your employer's permission. I feel a lot more secure knowing that I have permission from my main gig to take private clients on the side.

chrisv24

Ok Thanks guys.

1 other question. If I register as a sole trader do I have to pay anything other than tax on my extra income? i.e. national insurance etc (sorry, im completely new at this and need to do some reading).

There is nothing in my contract saying I can't do work outside but no doubt my boss wouldn't be over the moon about it.

chrisv24

tiger_eyes wrote: »

You may need to pay National Insurance on your self-employment profits - I pay class 2 and class 4. I'd also second what previous posters said about getting your employer's permission. I feel a lot more secure knowing that I have permission from my main gig to take private clients on the side.

My profits likely wont be above £5k. Its just an extra bit of income, so I take it that means i don't have to worry about national insurance.

My boss wouldn't be angry if I take on extra work. He just said to me once that he personaly wouldn't find it appealing to do himself.

Lagoon

chrisv24 wrote: »

My profits likely wont be above £5k. Its just an extra bit of income, so I take it that means i don't have to worry about national insurance.

My boss wouldn't be angry if I take on extra work. He just said to me once that he personaly wouldn't find it appealing to do himself.

If you earn less than £5,595 per year you can apply for a Certificate of Small Earnings Exception and not pay Class 2 National Insurance contributions. You'll continue to pay NI elsewhere, but you do need your exemption certificate to avoid being charged additional NI. The form to send off is here:

http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=yKpjabZqCc8&formid=433

Suarez

Lagoon wrote: »

If you earn less than £5,595 per year you can apply for a Certificate of Small Earnings Exception and not pay Class 2 National Insurance contributions. You'll continue to pay NI elsewhere, but you do need your exemption certificate to avoid being charged additional NI. The form to send off is here:

http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=yKpjabZqCc8&formid=433

Does that not include income from full time employment?

Lagoon

Suarez wrote: »

Does that not include income from full time employment?

It didn't when I did it a few years ago. The form I filled in (for some reason the PDF won't load for me now) asked about my salary elsewhere.

Hopefully I've not linked to the wrong form!

InsideInsurance

Suarez wrote: »

Does that not include income from full time employment?

It doesnt.

At year end you do your tax return that includes both your employed and self employed incomes plus what tax you have paid to date (ie tax from employed life and on savings etc) and it will calculate what you owe/ are owed based on the grand total

tiger_eyes

Something else to consider is that if you pay income tax on your self-employment profits through a self-assessment tax return, next year you may have to make payments on account. I still don't 100% understand this concept, but as I understand it, if you paid £500 in income tax on your self-employment profits this year, you would be due to pay a further 50% of it (so another £250) by next January as an advance on next year's income tax. Then you settle up the remainder at the end of the next tax year. I think that's roughly correct! So when you start paying income tax on your profits, stay on your toes for payments on account the year after.