Have I got this correct - tax on additional income

Lomcevak

Probably a very basic question and not really a 'cutting' tax question, but want to make sure I get it right.

I work full time (higher rate taxpayer, above NI UEL) but recently did some additional work for a 'friend of an acquaintance' which is complete to everyone's satisfaction. I asked if they wanted an invoice, but they said they "couldn't be bothered with all that" and paid me in cash. Total is roughly £1200, of which £200 were reasonable expenses fully incurred doing the work (I have receipts) on my personal credit card.

This will all be declared on my next self-assessment, so I was going to pay off expenses and just put aside £400 to cover tax when eventually due. Is that all I need to do? Will HMRC care that there are no invoices etc., or should I write myself a receipt or something so there is some kind of paper trail?

Sorry if it is basic, but always been PAYE up until now so not quite sure how this works

trailingspouse

As it would be you producing the invoice, I see no reason why you shouldn't produce one anyway, even if your client 'couldn't be bothered' with it. That way your paperwork is all in order - how your client deals with his own paperwork is his problem. It doesn't even need to be a formal invoice, if this isn't something you do regularly - just a letter stating how much you are owed and splitting it between expenses and everything else. You then have the receipts to back up your expenses, and the deposit into your bank is proof of the overall amount.

chrismac1

Good previous post. Note there is no legal obligation to raise invoices, no matter how much some HMRC staff members would like that to be the case. It just makes everything a lot clearer.

Lomcevak

Thanks both, i'll print off an invoice, mark it "received cash <date>" and file it away until taxtime. Assume that self-assessment will just come back with 'you owe £400' (ignoring other adjustments) in due course