Is the second source of income worth it?

lessavyfav

Hi all

I should call up HM Revenue and Customs but my question is a bit convoluted with a few questions attached to it..wondering if people have been in this situation before, before I give the tax people a call!

I am about to start a new job, £30k p/year. My old work is willing to throw the odd freelance job at me, which I can tackle at the weekend, it will be approximately 1-2 days a month (my current day rate is £200 + VAT). While I was freelancing over the past three months, I used an umbrella company who do all the tax, invoicing etc for me with a flat surcharge of around £16ish or so per week I invoice, but I was thinking that for such a low amount of work, I could try to tackle this myself. But it's completely new territory for me, I have no idea what's the best approach.

So my questions are:
- Should I change from umbrella company to limited? And then do I need to be paying tax on a monthly basis or can I do it less frequently (quarterly)? I'm so unfamiliar with how things work for freelancers in the UK and just want the simplest way of dealing with it without losing a significant chunk of the secondary pay!
- My new contract says I can't work for anyone else, and I know it's a bit cheeky but it's not like I'd be working on freelance work at my new place of work - I'd only be doing it at home on the weekends or maybe night time (and it's in no way conflict of interest). Is there any way they would find out I'm doing work on the side because of tax codes or whatever? ie would they be informed? Has anyone else been in this situation or is it risky and silly?
- Overall, is the 200-400 extra per month i might get going to be worth it, would I be taxed 40%? Or would it be less because combined income would still be less than £38k?

I desperately want to be saving more money so the extra cash per month would really help - just a bit annoyed my contract stipulates I can't work because I have worked hard over the years and have niche skills that I want to utilise if I can!! Big companies being greedy, methinks :cool:

Suarez

40% tax is around 41k. Can't remember the exact amount.

Ypaymore

Cutting Tax Board is here = http://forums.moneysavingexpert.com/forumdisplay.php?f=22

droopsnoot

I would think the sticking point is the contract term that says you can't do work for anyone else. Often that's about a conflict of interest, but it can also mean that if they need you to work weekends you'll be available, or that you won't be turning up to work half asleep because you've got a job in a nightclub and don't get home until 4am. You run the risk of dismissal if they find out.

If you do a self-assessment, they'll either want the money paying directly, or adjust your tax code. If the latter, then your company payroll department will figure out that's because you owe extra tax, but might not be able to find out why. Of course they might ask you, and then you're no longer in a position where the matter just hasn't come up - you have to choose between lying to them, or owning up and risking the job. It might just be someone in HR thinking you're being stitched up and paying too much tax and thinking they'll help you out.

Keep in mind of course that if it takes you into the higher-rate tax band (your figures suggest that it won't, £30k + 12x £300) you only pay the higher rate on the income over that threshold.

lessavyfav

thank you! it was mostly the bit about working when it says in my contract that I can't, that worried me. But all good, I have asked HR and my new boss if there's any leeway and they've said I am fine to work as it's not conflict of interest - very happy!