2nd Job

fruitloop04

Hello,

I have done a bit of googling but I can't really seem to find the information I need.

I have a new job which I am starting soon. My current job have asked me if they can employ me for a couple of days a month to do some work with them. My new employer has said this is okay but I can't work out if it is viable!

My new role takes me into the higher tax bracket so is it even worth me taking the extra work? I haven't set how much I will charge them per day, do I need to add 40% to account for the extra tax I pay? Or should I go self employed for the second job? How does affect my tax? This is all very new to me!!

Also, I have never done anything on a consultancy type basis - is there a general rule for how much to charge them?

TIA!

Gazzafatcityboy

hi there,


Two questions here:


Dependent on your field, its hard to say how much you should charge for consultancy. In my field of finance we typically charge £500 per a day. If that was the case then I would definitely register yourself as a limited company then you will only pay corporation tax rather than 40% plus.


G

trailingspouse

Look at it this way - worst case scenario, the most you will have to pay in tax on the extra two days per month will be 40%. Are you prepared to work for whatever the daily rate is less 40%?

You might be able to reduce that figure through using a limited company (but talk to an accountant first, it might not be worth the effort) - but the worst it'll be is 40%.

As to consultancy work, there isn't a set fee, it all depends on your industry and level of experience. Some people set a daily rate, others prefer an hourly rate - again, it depends what's normal for your industry. I regularly sub-contract someone who doesn't get out of bed for less than £1000 per day - and others (granted not as experienced) who we take on at £450 per day.

getmore4less

The first thing to remember is two jobs PAY pay less tax than the same hours in one job.

Start with them as 2 PAYE jobs and see what tax and NI you would pay leaving net. don't forget the holiday pay on those 2 days a month.

Even if you go Ltd you still have to get the money out and that gets taxed on top of the Corp tax and you have the time/expense of the company but it may be a useful way to create a pot for the future and some pension diversion.


A rough guide for going from salary to fully external is double the day rate. or use the salary is hourly rate ie. £50kpa==£50ph

If you were getting £40k to do the job 260 days a year that's around £150pd £300-£350 would not be far off for a normal contractor.

It may be worth more to them and as this is not a main job you need to have a higher value point as well.

There is the secondary value here that you keep contacts/networking and a fall back if the new job does not work out. and gain experience to go fully self employed or build up more extra work.

fruitloop04

Thanks for the advice everyone. I work in the health care sector and my current employer is not the most wealthy so don't want to go in ridiculous! I think about £300 per day would be fine, but I know the last contractor got paid £125 per day so they might turn me down - which is fine. It's a nice opportunity to earn some cash and pay the debts quicker and then go on holiday! They are nice people too so don't want to leave them in the lurch but it is also my weekends that will be taken up.

I think a LTD company would probably not be worth the hassle setting up for this but what about registering as self employed - what tax would I pay on that rather than having the second job as PAYE?

getmore4less

In many professional settings companies will only contract through agencies and companies(LTD or umbrella) and not basic self employed.

if they will let you do it self employed the big saving is probably NI as that will probably be zero @ £300pd 24 days a year, I think you will find 40% on the rest but might be able to squeeze some expenses.


For a low ball conversion from salary to day rate you have employer NI 13% and holiday pay 12% then no other benefits and reduces overheads for the employer.
I would ask for uplift on your old salary between 50% to 100% if you want to be nice to them.

£125pd is very cheap equivalent £15k-16k.