Going from FT PAYE to PT PAYE and PT self-employed?

clhs

Hi, all,

Politely requesting advice/ input.

I currently work full-time on a PAYE basis for a great company going through a hard time financially. I've been offered some part-time (two days per week) work with another company in the same field. Told current employer about the offer and they are very happy for me to drop down to three days per week to save them some money.

Having calculated my daily rate, I am thinking of working with the new client for two days per week on a self-employed basis, issuing invoices to the new company. What I don't know is how much tax to put aside in a bank account for when I do my first tax return. Assume it's 40%, as my total earnings would be over £33,500. Is that right?

Anything else I need to be concerned with?

Thanks so much in advance.

Dazed_and_confused

You appear to have misunderstood the higher rate tax threshold.

Assuming you get a personal allowance (and don't live in Scotland) then it will be 45,000 in the present tax year before 40% tax starts (11500 + 33500).

Depending on the profit your business makes though and your personal circumstances you could also have class 2 national insurance, class 4 national insurance, student loan repayments and child benefit charge to pay alongside your income tax (they all form part of your self assessment bill).

Don't forget if you start in the current tax year your first return will be due by 31:01:2019 which is also when you will have to pay any tax, NIC etc due for 2017:18. If your self assessment bill is more than £1000 you may also have to make a payment towards your 2018:19 self assessment bill on the same day (and another on 31:07:2019). Google 'payments on account's.

clhs

Dazed_and_confused wrote: »

You appear to have misunderstood the higher rate tax threshold.

Assuming you get a personal allowance (and don't live in Scotland) then it will be 45,000 in the present tax year before 40% tax starts (11500 + 33500).

But my personal allowance would have been used up on my first job. And it will put me in the larger tax bracket. So don't I need to accrue 40% tax on the secondary income?

Dazed_and_confused

If your taxable salary plus any employer benefits (company car etc) and any other taxable income plus your self employed profit takes you over the £43000/£45000 threshold then yes 40% tax would then be due (subject to private pension contributions which can increase how much of your income is taxed at basic rate).

Maybe I misunderstood the £33500 reference in your original post??

rtho782

Tax is based on your entire taxable earnings.

So if your first job pays you £30k PAYE, you can earn another £15k at 20% before you start paying 40%.

antrobus

clhs wrote: »

...Having calculated my daily rate, I am thinking of working with the new client for two days per week on a self-employed basis, issuing invoices to the new company....

You might be thinking of a self-employed basis, but it might not be your choice. What does your new 'employer' think about that proposal?

You might need to Check employment status for tax
https://www.gov.uk/guidance/check-employment-status-for-tax