How will I be taxed as a freelancer in a full time job?

jimmymoon

A tax novice here so forgive me...

I currently work for a company full time and receive a salary from them. I haven't asked if it's possible yet but they used to employ me as a freelancer before offering me a permanent contract, and I've been considering asking if I could taken on freelance work on weekends when I have little else to do to earn some more pocket money.

I have a separate bank account dedicated solely for earnings I make as a freelancer, so when it comes to determining what tax I need to pay, I can be sure exactly how much of that money has been from freelancing. But how would it work when I already receive a wage from the same company? Presuming I'm paid in the same way I used to be, the freelance work will result in me sending an invoice and they'll pay me directly into my bank account. But as I'm already taxed on my salary, how would the money I make as a freelancer be taxed? Is this something I'd have to declare myself? Or is it something the tax man would even be aware of unless I told them about it?

Any help and advice would be greatly appreciated.

MoneyMoney

I would be very surprised if they took you up on this, I have done quite a bit of freelance / Ft with the same companies but they either were one or the other at the time. This would be overtime. When I have had a FT job and done some freelancing for other firms on the side I just declare it on my self assessment and it was taxed at the higher rate as the FT job eats up the lower rates. Not a tax person at all just my experience...

jimmymoon

So you're saying if I leave my wage to be taxed the usual way, I should just do a self-assessment on my freelance earnings every year and it'd all be alright?

Again, being a complete tax novice, how would they actually know how much taxable earnings I've made without telling them? It's not that I'm planning to try and avoid paying tax, I'm just genuinely curious how the tax man can be sure what you're telling them is genuine.

wesleyad

jimmymoon wrote: »

Again, being a complete tax novice, how would they actually know how much taxable earnings I've made without telling them? It's not that I'm planning to try and avoid paying tax, I'm just genuinely curious how the tax man can be sure what you're telling them is genuine.

Yeah that's how it works. How do you think they find out how much any self employed person is paid? You declare it and they "trust" you. They rely on people being honest (and scared of being audited).

soolin

wesleyad wrote: »

Yeah that's how it works. How do you think they find out how much any self employed person is paid? You declare it and they "trust" you. They rely on people being honest (and scared of being audited).

The company paying you will also be adding the amount paid to their own accounts, perhaps along with a lot of other payments, so there is a double check should HMRC choose to audit it.