Additional income - what to do re tax/status?

aconfusedone

In January I embarked on a new career as a web developer with a small agency in London. I work full-time with the company and am on PAYE.

In February, March and again in earlier in May, I did some 'side work' creating small websites for two friends' companies. Payments were made to my bank account and amount to £1000.

I've never been self-employed before or filled a tax return. I have been reading various sites but have become a little confused about exactly what I have to do and was wondering if anyone to could set me straight.

1. Am I supposed to register as a sole trader (even though I am also a full-time employee for a company) or is that not necessary?

2. Is the new work I did in Feb and March to be submitted in a tax return for the tax year April 2012 to Apr 2013 in January 2014 and the work I did in May supposed to be submitted in Jan 2015?

3. Can I add my computer (purchased in February), software, broadband etc. to a list of expenses?

4. Is there anything else I need to do in addition to the above?

Thanks in advance for your help and sorry if these are stupid questions!

PlutoinCapricorn

Were these one-off jobs, or do you hope to get a lot more freelance work?

If it was just a favour for a friend and is unlikely to happen again, there is no need to register as a sole trader, but you do need to let HMRC know about additional untaxed income.

aconfusedone

I imagine I'll get some work infrequently in future. Small jobs e.g. £250 a time half a dozen to a dozen times a year, possibly more.

How do I inform HMRC? Do I just fill in a tax return at the end of the year?

quotememiserable

Yes, you can just fill in the income on your tax return. You can also claim expenses but there are a whole lot of rules around this - its unlikely you'd get your computer because it has non-work uses. However, you can probably claim a nominal amount for your home office - my accountant mentioned a figure of a few pounds a week (don't remember the exact figure I'm afraid) being one that wouldn't raise any eyebrows. I would recommend you ask round for a good local accountant to help you get the allowances right. You should be able to find one to give you an initial discussion at no charge and then do your tax return for you for around £250. Any accountant worth his salt should be able to save you more than that.