Help with Second Income Should it be Self employed? LTD comp or existing tax return

rajuk

Hiya

I would like some advice please

I currently work as a junior hospital doctor. On standard PAYE. I am not a GP or Consultant.

However despite lots of years of experince i Can do medico legal work for Solicitors. Basically doing a medical examination and documenting the findings.

This would be done in my spare time and be second income.
The income would come from varioys solictors or agencies who have asked me to do the examination. Part of my costs would be renting consulting rooms, secreterial services, phone, stationary postage internet etc

I will never hit the 63000 Vat threshold that was imposed recently so no worried about VAT.


My query is how would I declare my income on my rax return?

Do i make a balance sheet of income in and cost and declare my profit at the end in the Other income section of my tax return? Id be taxed 40%


As im claiming expenses this automatically mean I have to either be registered as Self employed or LTD compant for this additional income-

Id like to offset my car/phone intenet etc as a proportion would be used for this work. My understanding is that it is easier to offset the car if I am a sole trader is £3000 a year?


The reason I made the point of not being a Consultant or GP is that Ive read that a doctor can only be self employed if he reaches the status of GP or consultant. In the above circumstance could I be self employed?


Regarding LTD company could i use this to pay less tax? ie paymyself dividents which would be much cheaper than paying 40% income tax on second income. My concern here is the IR35 rule affecting Ltd companies
Also it would be harder to claim the biggest expense which is my car.



Last query, even though I wont be hitting the VAT threshold of £63000 would it be cost effective to register for VAT.
The agencies will pay the VAT anyway.
All my expenditures are subject to VAT such as consulting room rent, stationery, broadband , petrol, phone bills, computer equipment etc so potentiall i could claim back the 17.5%?


Thanks in advance for your

silvercar

you need a good accountant to sort this for you.

In my unprofessional opinion, you could set up a ltd company and pay yourself dividends to reduce tax. you would try to avoid IR35 as you are employed by the hospital and have your own work.

Are you allowed to do private work when employed as a junior doctor, check your contract? I thought doctors were permenantly short of sleep, how would you find the time to do both?

rajuk

Finding time to do both wont be a problem
The job I have is one which is just 9 to 5 job 40 hours a week, in comparison to before where I regulalrly did 60-70.
Despite having nice lifestyle it does meant a massive drop in Pay, but thst what you get for not doi ng oncalls.
Hence the hours worked wont be a problem I will look into the contract about private work

Bean_Counter

To answer some of your questions:

You would declare your second income on the self-employmnent supplementary section of the tax return

Keep a record of your income and expenditure. There are suuggestions of good software to use on other threads (note a balance sheet is something different)

You would have to register as self-employed in the first three months to avoid a £100 penalty. You can be either a sole trader or limited company, it is up to you.

The £3,000 for the car sounds plain wrong. It would depend on your circumstances whether it was better to have the car through the book or just claim the 40p per mile for business miles.

The bit about having to be a GP or consultant to be self-employed is also wrong. It just so happens that all GP practices that I have come across are set up as partnerships and hence self-employed. There are many reasons for this, not least of all because it makes life easier when GPs come and go.

Paying dividends from a limited company saves on national insurance; you pay the same amount of income tax.

I agree with silvercar. Get a good accountant to advise you on which business format best suits your needs and whether voluntary VAT registration is a good idea or not. They can also see the best way to structure car costs based on your specific details.