Tax on side hustle

EMcB88

Hi there, I work in sales and am in full time employment.
Over the past month, I've started to do some work on the side for my family friend's company to help them launch some new products in the UK. They have agreed to pay me a monthly retainer initially and then commission on any sales subsequently achieved as a result of my work for them.
They have asked me to invoice them for the first monthly retainer. Is this the most efficient way for them to pay me from a tax perspective? Please could anyone share the implications from a tax point of view and things I should consider?
Side note: I've checked with my employer and they are happy for me to do this as well as checking my contract and I am not breach.
Many thanks!

K_S

@EMcB88 If the income (retainer, commission) from the side business exceeds £1,000 in this tax year, that will be taxed as self employed income. You will have until 5th 2021 to notify HMRC of the same.

Assuming your personal allowance is used up by your full time job, the side business profit (income less business expenses) will be taxed at your marginal income tax rate (20%/40%/45%).

You will also pay NI (rate depends on profit levels).

Your client will need an invoice from you as your retainer will go on their books as expenditure and it needs to be supported with adequate documentation.

Jeremy535897

First you (or rather your customer) need to establish whether you really are self employed. See:
https://www.gov.uk/employment-status/selfemployed-contractor