Declaring money made from ad hoc work

Okinaw

Hi all,
A few months ago I was approached by a friend of an ex-colleague, who asked if I'd help out at their business as a consultant and they would pay me a day rate - I agreed and was paid by bank transfer. Since then I've worked a couple more days here and there but I have now earned over £1000, which I know is the threshold at which you have to inform the HMRC.

I'm just wondering how to go about it. I went on the government site (https://www.gov.uk/check-additional-income-tax) and looks like I may need to do a self assessment. This is just ad hoc work and will not be repeated (I was just helping temporarily until they could hire someone else), so I am not sure I would count as self-employed but then the criteria for 'not self-employed' don't seem to fit either! I also have a full time job (basic rate and even with the extra earnings it wont take me to a higher rate) where I am on PAYE.

Does anyone have any advice? As you can probably tell I am quite clueless and I find what information I can find quite confusing!

Many thanks,

Sandtree

Did your friend deduct tax/ni etc from the money he paid you?

If not, then its safe to assume he was treating you as self employed and therefore you’d need to register and do self assessment for the financial years in which this arrangement exists. Once you’ve done it you can deregister for SA if you dont want to do it any more.

AskAsk

Sandtree said:

Did your friend deduct tax/ni etc from the money he paid you?

If not, then its safe to assume he was treating you as self employed and therefore you’d need to register and do self assessment for the financial years in which this arrangement exists. Once you’ve done it you can deregister for SA if you dont want to do it any more.

i don't think it is as easy to deregister self assessment is it? wouldn't the OP need permission from HMRC to stop filing self assessment?

Savvy_Sue

AskAsk said:

i don't think it is as easy to deregister self assessment is it? wouldn't the OP need permission from HMRC to stop filing self assessment?

They might not let the OP de-register immediately, but a) filing a 'no other income' return doesn't take long and b) once you've submitted a couple of them, HMRC are reasonably pragmatic about this, at least in my experience. 

Okinaw

Sandtree said:

Did your friend deduct tax/ni etc from the money he paid you?

If not, then its safe to assume he was treating you as self employed and therefore you’d need to register and do self assessment for the financial years in which this arrangement exists. Once you’ve done it you can deregister for SA if you dont want to do it any more.

Hi, he paid me the full day rate with no deductions. Would I be classed as self-employed though, as it was only a short-term thing not to be repeated? Can a Self Assessment be a one-off or will the HMRC assume I am self-employed from then on and I will have to de-register as you suggest? 

Many thanks!

Savvy_Sue

Doesn't matter whether it's a short-term never-to-be-repeated thing or ongoing: HMRC won't care how you describe it. It's given rise to a tax liability, and that's all they care about. 

If there's space on the form to tell them it's a one-off, tell them. If they don't ask you to complete a tax return in future years, you don't have to, unless you know you owe them tax. 

MrsToe

Looking for advice as in a similar situation, only the ad hoc work on self employed terms, income was from overseas, did not amount to £1000.00 in tax year and work now ceased - would I be correct that since below the £1000.00 it doesn't need to declared. Or does it need to be declared but would result in generating no tax since it is less than the trading allowance?  For clarification I work full time above the £12500 tax allowance but in the lower tax band with PAYE.
Just want to make sure that I am meeting legal obligation
Thank you in advance for enlightening me,

AskAsk

MrsToe said:

Looking for advice as in a similar situation, only the ad hoc work on self employed terms, income was from overseas, did not amount to £1000.00 in tax year and work now ceased - would I be correct that since below the £1000.00 it doesn't need to declared. Or does it need to be declared but would result in generating no tax since it is less than the trading allowance?  For clarification I work full time above the £12500 tax allowance but in the lower tax band with PAYE.
Just want to make sure that I am meeting legal obligation
Thank you in advance for enlightening me,

this article states you don't have to report to HMRC if it is below 1k

https://taxaid.org.uk/guides/information/a-starting-point-for-the-self-employed/self-employed/trading-allowance#:~:text=That is income before any,or file a tax return.&text=You do not need to report this income to HMRC,£1,000 or business expenses.

MrsToe

Thank you so very much for clarifying - Really helpful.

Sharon87

I work both PAYE and self employed ad hoc work throughout the year. Last tax year I didn't earn over £1000 in ad hoc work, I still filled out my self assessment but instead of giving my income/expenses I ticked the box that asked if I earned less than £1000 in that tax year. I find doing a self assessment even if you're PAYE can be helpful, especially if you're like me and change jobs a lot (freelance, but my job isn't 'self employed'). As then if I owe or am owed tax back, then it can be sorted quickly. It literally takes me less than an hour to complete as I'm usually quite organised with my payslips throughout the year.