Decision time: PAYE or Self Employed

CNSam

Hi all,

Hoping you can help.

I have succesfully acquired a new position on a relocation basis with a new company (im a web developer) who will be paying me on PAYE...all fine here.

My current position have proposed I work for them on a 'part time' basis of 10 hours per week, should I wish to (new employer is fine with this) so this would become a second job. They have now asked how I would like to go about the financials of this and how I would like it to be on paper, ie whether I stay on their PAYE too or whether I go self employed.

Im trying to work out the tax implications of both but have no understanding of the self employed world.

Say for example my combined wage over the two jobs was £39,000:
- Job A (full-time) = 32,000
- Job B (second job) = 7,000

I assume I would be taxed at 40% on anything above the 32,000? How would going self employed benefit me at all? The point of taking the second job is to basically potentially cover a mortgage or a holiday kitty.

Many thanks in advance

chrisbur

CNSam wrote: »

Hi all,



Im trying to work out the tax implications of both but have no understanding of the self employed world.

Say for example my combined wage over the two jobs was £39,000:
- Job A (full-time) = 32,000
- Job B (second job) = 7,000

I assume I would be taxed at 40% on anything above the 32,000? How would going self employed benefit me at all? The point of taking the second job is to basically potentially cover a mortgage or a holiday kitty.

Many thanks in advance

You appear to be missing out the Personal Allowance. What is your tax code at the moment?

CNSam

chrisbur wrote: »

You appear to be missing out the Personal Allowance. What is your tax code at the moment?

Sorry, tax code is 1072L

steampowered

I'm no expert, but I think you'll find that income tax will be the same either way. However national insurance may be different. Also you will have less employment rights if you go down the self-employed route.

Undervalued

Legally you can only treat this a self employed if you actually meet the criteria laid down by HMRC. There is (or used to be) an interactive guide on their website although many people feel this is skewed to tend towards PAYE.

That said, providing you declare the income, any comeback for getting it wrong will fall on the employer.

Even PAYE you would have few relevant employment rights for the first two years. Sometimes a carefully negotiated contract for services can actually put you in a stronger position.

p00hsticks

CNSam wrote: »

Sorry, tax code is 1072L

So you won't start paying 40% tax until you start earning more than £42,720 (your 10,720 tax allowance plus the £32,000 basic 20% rate band)

awara

typically If your hours are fixed ie 10 hours a week and go on set time to clock in and out then you are employed.

OK now why your employer is so flexible because even though you wages are not enough for them to pay any National insurance or they get allowances these. you will have rights as employee and you can also be entitle to holiday and sick pay etc. So I would stay as Employee.

What could happen to your finances if you are working 2 places.

Your this employer will be told to treat you as basic rate payer i.e you will have BR code so say you get £600 a month you'll pay £120 tax that will be adjusted to your whole income at the end of the year hence many people here get Tax refund. As you are Basic Rate payer because you are making more than £11000 in another job so you will have no repayment at the end of the tax year but as p00hsticks said if your total income is over 42720 then that will be adjusted for 40% tax.

But if you work more than 2 places than your tax code with every employer may be adjusted to BR and all income will be adjusted at the end of tax year as you would paid £7800 tax as opposed to say £5700 based on your wages there.



In short stay employed

getmore4less

If you don't have a break and go PAYE you retain your employment rights.

One disadvantage of PAYE and being an employee they can treat you like one which may not fit as a second job if it clashes with the first.

I would clarify that there will be the flexibility to work round your main job. and things like holidays will not be a problem.

You probably know already how this extra work will be done, add hoc, set times/days and how the company handles deadlines and panics to know if this will be feasible.

Relocation, can we assume the extra will be a work from home type role, will you be required to go into the office?

The simple option is PAYE, many companies when they say self employed will then look at things like indemnity insurance which may not be worth the bother for a part time job.

if you want to retain more flexibility you could look at annualised hours or even zero hours depends on the type of work on offer.

CNSam

Ok folks,

Im really confused.

I spoke to MAS this morning (money advice service) who advised me that anything above the 32,000 I would be paying 40% on which assuming that would be the 7000 from JOB B?

So confused regarding all of this - anyone able to breakdown what tax I'll pay based on the above on PAYE just so I know exactly where I am, im afraid maths isn't a strong point :P :rotfl:

getmore4less

£7k second job no NI on £135pw, needs to go over £155pw

total under the 40% bracket as above post, then just 20% tax.

you can always manipulate the tax with pension contribution


2nd jobs can be better than overtime in a first due to the NI being per job.

CNSam

Thanks again,

So the income tax is worked out on the taxable income which is:
39,000 - 10720 = 28,280 - so the tax bracket as you correctly stated is 32,000 I am under this?

I feel like I've learnt something today -_-