£2500 before needing to do tax self-assessment?

[Deleted User]

I'm employed full time and receive my salary as PAYE as a higher-rate tax payer.

Thinking about doing some extra work, separate from my full-time job, and my clients usually issue cheques for my work. Let's say I will get £10,000/year doing this

I had thought about setting up a limited company to reduce tax via dividends, however, during my research, saw this:

https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

You’ll need to send a tax return if, in the last tax year:
...
-you got £2,500 or more in untaxed income, for example from tips or renting out a property - contact the helpline if it was less than £2,500

-your income from dividends from shares was £10,000 or more before tax

Does this mean that I can earn £2500 per year doing my side-job before I have to start declaring extra earnings for tax?

And if I do form a Ltd company and pay my wife dividends (tax free), I take it she does not need to complete a self-assessment if the dividends are only £2500/year?

Thanks!

BoGoF

The £2500 does not apply to self-employment - you need to register for Self Assessment if self-employed.

00ec25

no 2,500 is not a magical extra tax free allowance, it is simply an arbitrary threshold above which you must do a full tax return if you have untaxed income. If you are below that threshold you are still required to declare all and any untaxed income by the old fashioned methods: by speaking or writing to HMRC

that said, as the previous poster mentioned, the self employed must register for a tax return irrespective of whether they have 1p or £1m of untaxed income

agrinnall

The question seems to be moot anyway if you expect to earn £10K per year from the SE work.

[Deleted User]

Checked with an accountant, it’s the first £2500 you earn. And because I’m already earning enough to pay tax, doesn’t apply to me.

hareng

What you earn over and above your day job you will have to pay additional tax, no way out.
Self Assessment est £10k, all other earnings (day job) declared including personal savings the lot. Any acccountant worth his salt will tell you that.

Think it was £10.5k above that you pay tax NI etc.