Extra Income - Tax advice please!

MrsB-

Hello, my first post... so please bear with me!

I currently work full time and have always done lots of art and crafty things for a hobby, making gifts etc. A number of people have suggested I should sell some of these items on websites such as etsy... but i'm unsure about the tax implications.

From what I've read so far, I would need to register as self-employed - but can I keep this completely separate from my tax and national insurance payments with work? Can I pay for any taxes etc. separately though the annual self-assessment? Would my earnings through this small business affect my work (full-time employment) taxes at all?

Hope this all makes sense... thank you very much for your help!

Chocforever

Yes, you would need to register as self employed. As you say, you can self assess the profits in a tax return (you will automatically receive one after registering as self employed) and pay any tax due directly to HMRC.


It won't affect your PAYE or NIC through your employer (and your employer won't know you have registered as self employed). I am saying this based on my own tax situation but, thinking about it, I don't know what happens if you are claiming tax credits - that would need checking, though I would be surprised if HMRC passed any information to your employer which would disclose you had other earnings.


As a self employed person, there are options for paying NIC on business profits in the same way as someone employed pays NIC via their payroll. If you are only making a relatively small amount via the craft sales and you are already paying NIC through your employment, you may find there is no point in paying additional class 2 NIC. In this case, it is possible to make a small claims exemption from class 2 NIC (this is easy to do online and lasts for a few years).


It sounds like a lot of hassle to register as self employed and opt out of class 2 NIC but actually it is only a couple of short forms to complete.


Good luck with the craft sales.