Extra income every month

grouser

Hello,

I have a full-time job with a company but now I am going to help another one to get extra money. I am going to be paid monthly but I don't have a contract with them. It is only 16h a month, around £700.

They have told me to send them an invoice but at the moment I am not registered as self-employed. Could I invoice them and at the end of the tax year fill the self-assessment form?
Should I use an umbrella company instead?

Many Thanks.

TheCyclingProgrammer

Assuming this is genuine self employment and your client isn't trying to pull a fast one with regards to employment rights then you need to register as self employed.

If you start before the end of this tax year you've got until October to register and your first tax return will be due in Jan 2018. If you start after the tax year ends you'll have until Oct 2018 to register and your first return will be due in Jan 2019.

Even if you're self employed you should have a contract drawn up outlining your business relationship, what your fee is, if there's any notice period, the scope of the role etc.

You can invoice them each month. Keep a copy of all your invoices and also keep receipts for any expenditure as you may be able to offset this against your income to reduce your taxable profit.

You could use an umbrella if it's less hassle for you but you'll be giving them a cut of your fee for very little.

kidmugsy

You have checked that you are not going to violate your terms of employment, have you?

grouser

Yes, it is a genuine one.

So, I guess it is better to get the first payment after 6th of April as it starts the new tax year and I will have more time to get everything sorted out.

Ok, I will tell the company to make a formal contract.

So the only paperwork I will have to do is just to fill in the Self Assessment tax return form once a year? If so, maybe it is not worth it to use an Umbrella company.

trailingspouse

Don't bother with an umbrella company - you just need to be a bit organised, to make sure you keep a record of all the hours you work for them so that you invoice for the correct amount each month (and remember to invoice them, and remember to chase it up if the money isn't received). You also need to keep a record of expenditure related to this work, as this will be deductible.

It might be worth speaking to an accountant (they are often happy to give you 30 minutes of their time for free in hopes that you will become a client). They will be able to help you with things like which types of expenditure are tax deductible. It's only 16 hours at the moment, but you might end up doing more, or doing something similar for another client, so it's worth getting it right from the beginning.

dori2o

Is this the only company you will be providing your services to or will you be open to offerring services to others?

If you cannot perform the work one day/week could you send someone in your place, I.e can you determine who undertakes the work?

Who will be providing the tools/equipment required in order for the work to be done?

Can you decide how the work is done?

Can you decide when the work is done or do you have to attend according to fixed hours/working pattern dictated by the company?

Are you there to do one particular job/piece of work or can you be moved from job to job as the need of the company demands?

If work is completed wrong or you have to rectify errors would you be paid for the time it takes to rectify or would you be required to put things right in your own time at your own cost?

I would, given my experience, always be wary of any business that insists that you are self employed without checking for myself first. It is afterall you who loses out when it comes to things like holiday pay, sick pay, NI contributions, etc etc.

Check out the information here

https://www.gov.uk/guidance/check-employment-status-for-tax

If it is self employment then ideally you should register as soon as possible, but as TCP stated, you must register within 6 months of the end of the tax year in which self employment commenced. If you fail to do this then you can receive a penalty for late notification, known as a Failure to Notify penalty.

grouser

Thank you for your help. One more thing. Should I include the VAT on top the £700?

Best,

TheCyclingProgrammer

grouser wrote: »

Thank you for your help. One more thing. Should I include the VAT on top the £700?

Best,

Only if you're VAT registered.

agrinnall

TheCyclingProgrammer wrote: »

Only if you're VAT registered.

And of course, if you do voluntarily register for VAT that will increase the amount of record keeping and paperwork required.