Freelancing while in FT employment

lemoncrush

My previous employer has offered me some freelancing work. I currently work FT and I'm a high earner. Since there's no conflict of interests I shouldn't have a problem with my current employer, but letting them know is good practice.

The real question is, I know I have to pay taxes for the profits of my freelancing gig. Would I be able to claim a laptop / electricity/ broadband/mobile as expenses?

Thanks!

Dazed_and_C0nfused

Would you be doing this as a sole trader (self employed) or by setting up a company?

https://www.gov.uk/expenses-if-youre-self-employed

DE_612183

if you are working from home there is a fixed cap - think it's £6 a week or month for utilities etc.
Laptop etc - if you buy a new one purely for business use, then yes it's an allowable expense - so are paperclips!
Mobile - if it's solely for business - yes also an allowable expense - but you must be on a business tariff with your mobile provider - which may be more expensive than the tax you save....

lemoncrush

Ok so realistically just the laptop. Is there any benefit between setting up a company Vs sole trader? 

DE_612183

lemoncrush said:

Ok so realistically just the laptop. Is there any benefit between setting up a company Vs sole trader? 

Depends on how long you intend operating and how you are planning to distribute money - if you have a Ltd company you can have two shareholders ( or more ) and distribute dividends accordingly thus reducing your tax bill. Best to speak to an accountant - by the way is the freelancing gig inside or outside IR35?

lemoncrush

I haven't discussed the ins and outs, but I'm guessing id be outside of IR35. Knowing him he'll let me do whatever is most beneficial for me

Jeremy535897

DE_612183 said:

if you are working from home there is a fixed cap - think it's £6 a week or month for utilities etc.
Laptop etc - if you buy a new one purely for business use, then yes it's an allowable expense - so are paperclips!
Mobile - if it's solely for business - yes also an allowable expense - but you must be on a business tariff with your mobile provider - which may be more expensive than the tax you save....

If you are going to be self employed rather than an employee, this is incorrect. The £6 a week WFH is for employees only, and then only for those required to work from home, where the nature of the employment requires it. If you are self employed, you can claim the business proportion of any machinery or expenses, including heating and lighting, and your mobile contract does not have to be a business tariff whether you are an employee or self employed. See:
https://www.gov.uk/expenses-if-youre-self-employed

Grumpy_chap

lemoncrush said:

My previous employer has offered me some freelancing work. I currently work FT and I'm a high earner. Since there's no conflict of interests I shouldn't have a problem with my current employer, but letting them know is good practice.

The real question is, I know I have to pay taxes for the profits of my freelancing gig. Would I be able to claim a laptop / electricity/ broadband/mobile as expenses?

Thanks!

Is this freelancing just a one-off, or do you expect repeat opportunities?

If a one-off, you probably just do it and declare the tax and pay whatever is due as it is and treat whatever is left as a bonus.

If this is likely to be repeated, then it may be worth considering a Ltd Co.  This gives you the opportunity to time drawings rather than have to take in the tax year the work is done.  That flexibility could work out very useful.  There is also the dividend allowance that allows a small amount to be drawn tax-efficiently.

Another consideration would be to make the extra free-lance work as pension contributions so far as permitted.

lemoncrush

The idea is that it would be a repeat workload for the foreseeable future 

SiliconChip

If you decide to make a claim for business expenses incurred in running your home then you'll probably need to advise your mortgage provider (if you have one), freeholder (if in a leasehold property) or landlord (if you rent), your home insurer, and possibly the local authority.

Jeremy535897

SiliconChip said:

If you decide to make a claim for business expenses incurred in running your home then you'll probably need to advise your mortgage provider (if you have one), freeholder (if in a leasehold property) or landlord (if you rent), your home insurer, and possibly the local authority.

Normally problems only arise if you are selling stuff from the house, and you have stock and lots of customers coming to the door.