Advice needed RE contracting in spare time

ministe2003

Hi, I hope I'm posting this in the right place!

I'm in full time employment in a role I started in November. Today I've been contacted by someone from the company I just left offering me a very good hourly rate if I could help them out on a short term basis (basically they didn't replace me and are now regretting it).

The rate is very tempting but I've not done anything like this before, I've always just had a salaried full time job. If I were to accept, would I have to set up a company? Presumably declare myself as a sole trader or something? Also how does it affect my tax with regard to my current salary? How do I declare what I've earned? Do I need to write contracts, and what about invoicing the company? I really am starting from scratch with 0 knowledge on the subject!

Thanks to anyone who can help!

DomRavioli

You don't have to set up a company.
You would be self-employed, so would need to speak to HMRC with regards to tax and NI, which you would be responsible for paying (reflect that in your rate that you ask, increase as necessary).

With regards to tax, you get a personal allowance every year (your tax code). If you go over that, you pay income tax on any earnings over your tax code threshold.

You would need to write a contract, there's some great examples on the net, specific to your personal situation - but research thoroughly before you do, maybe ask on this board once you've found something and if you aren't sure always consult a legal professional.

Invoicing can be done using a basic word processor, and same with accounting, you can do it yourself if you know what you're doing with figures.

HMRC have an ok guide on self employment on their website, and there's a few sites around that have specific advice on self employment.

Hope this helps.

droopsnoot

You should also check your current employment contract to make sure there isn't anything in that to stop you taking on outside work. For example if your old company is in the same line of business as the new one, this might be an issue, or your company may have a general policy on this kind of thing.

ministe2003

Thanks, there's no issue with the company, they don't care so long as the work gets done,
Looked into it and I estimate I'd be exempt from NI since I don't expect my earnings to reach that threshold. I'd be done from home in my spare time so don't envisage any expenses so I think the self assessment shouldn't be too complicated. Would I write a contract for the company to agree to or would they send me a contract?