Second job - how do I pay tax and make things legal?

the_barretts

Have taken on a part time job working in the evenings at home doing data entry - I already work full time and this is for extra holiday cash.

I am being payed £6 per hour 4-6 hours per week and was asked to send in an invoice for the first month which I have done.

However I now find that tax and NI are not deducted from it and they will pay the money straight to a bank account or pay by cheque.

We ony get child allowance and family tax credit (£10 per week), no other benefits or discounts as my husband and I both work and this was not supposed to be anything ground breaking but now I wonder how I make things legal with the tax office?

I already pay tax and NI on my wages but how do I declare my extra earnings? Do I need to declare them? Its about £24-£36 a week.

Their accounts office has asked if VAT is included and what the IBAN & Swift/BIC code - obviously VAT is not charged, am I right in thnking VAT is only charged by those self employed if they earn over a certain amount?

My bank does not use IBAN & Swift/BIC so perhaps I should just ask for a cheque?

What would people suggest regards the tax and VAT? Does anyone know where I can find any information on the tax?

Thanks!

LittleVoice

VAT is charged by those people/companies who have applied to be VAT-registered. There is no minimum earnings level at which you can register but there is a maximum level where you can remain unregistered.

With your level of earnings - and assuming you are are not going to be buying much in the way of capital goods/consumables where you could reclaim VAT if you were VAT-registered - there is no point in registering as you will be below the threshold where registration is compulsory.

Are you sure your bank account doesn't have an IBAN number? Do check for details with your bank.

Contact HMRC to register as self-employed and pay tax in due course and any additional NI.

the_barretts

The bank account I asked the money to be deposited into is a savings account and was told this evening to use the BACS system but if payment went missing it would be hard to track so maybe payment by cheque would be better.

I think I will ring HMRC and ask what I need to do as I am already paying NI on my full time job so will have to check what my options are.

dawnydee73

How did you get into doing this job from home, this is something I wouldn't mind doing for extra money

Becles

You'll have to register as a self employed person and pay tax on your additional earnings. You'll have to do a tax return each year and declare the money you make from the data entry and a tax bill will be generated. It's wise to put away 22% of your earnings (or 40% if you're a high rate taxpayer) to cover your tax bill.

As you will be earning less than £4500 (approx!) you can register for Small Earnings Exemption. This means you won't have to pay Class 2 NI contributions.

You need to ring HMRC and tell them you are self employed within 3 months of starting, otherwise you could be liable for a £100 fine.

Have a look at the self employment section on www.hmrc.gov.uk and give the newly self employed helpline a ring to register. They'll sort both your tax and your NI exemption out.

Conor_3

The only thing that worries me is that this isn't true Self Employment.

Also Becles is wrong regarding the Small Earnings Exemption because you exceed the £4500 in your main job.

Becles

No I'm not wrong

It is self employment as you are invoicing a company for your services, rather than being paid through the PAYE system.

If you earn less than £4500 (approx) from your self employment only, you do not have to pay Class 2 NI as you can get Small Earnings Exemption. This is regardless of the Class 1 NI you pay in your main job.

poppyscorner

Becles is right I was told the exact same thing last year upon registering for self employment with the tax office despite the fact I was also a full time worker for the NHS I continued to pay tax and NI conts through my wages from my regular job and was told that my self employment was completely different.

Poppy x

Conor_3

Becles wrote: »

No I'm not wrong

It is self employment as you are invoicing a company for your services, rather than being paid through the PAYE system.

My bet is that she ticks all the yes boxes in the employed and only a few in the Self Employed.

From HMRC website:

Employed or self-employed?

Employee
If you can answer 'Yes' to all of the following questions, you are probably an employee.

• Do you have to do the work yourself?
• Can someone tell you at any time what to do, where to carry out the work or when and how to do it?
• Do you work a set amount of hours?
• Can someone move you from task to task?
• Are you paid by the hour, week, or month?
• Can you get overtime pay or bonus payment?

Top

Self-employed
If you can answer 'Yes' to all of the following questions, it will usually mean you are self-employed.

• Can you hire someone to do the work for you or engage helpers at your own expense?
• Do you risk your own money?
• Do you provide the main items of equipment you need to do your job, not just the small tools many employees provide for themselves?
• Do you agree to do a job for a fixed price regardless of how long the job may take?
• Can you decide what work to do, how and when to do the work and where to provide the services?
• Do you regularly work for a number of different people?
• Do you have to correct unsatisfactory work in your own time and at your own expense?

Becles

That's a pretty vague list. For my self employment, I tick more boxes in the employed list, yet I've been specifically told I'm self employed by the companies I work for.

My work is a mixture of self employment and employment, so I know from experience what I am talking about.

seven-day-weekend

Becles is right regarding the small earnings exemption, my husband registered for it for around five years from his self-employment although he paid Class 1 Contributions from his main job as a teacher.