1257L tax code when employed full time & self employed on the side

FrenchieHasAQuestion

Hi everyone, 

I am trying to figure out if I have the right tax code. My situation:

I have a full-time job which is the vast majority of my income. The tax code on my payslip is 1257L/0.

However, I have also been self-employed for the past 2 years or so. I take on translation jobs. They don't earn me a huge amount but more than £1k per year so enough to get taxed on.

My employer knows that I freelance on the side. I've also told HMRC about my full-time job when I've filled out my last two self-assessments.

Given this, is it likely that my tax code (1257L / 0) is wrong, especially given that 1257L should be for those with only one employer? My hunch is yes but wanted to get people's thoughts before checking with HRMC.

Thank you for your help! 

Marcon

FrenchieHasAQuestion said:

Hi everyone, 

I am trying to figure out if I have the right tax code. My situation:

I have a full-time job which is the vast majority of my income. The tax code on my payslip is 1257L/0.

However, I have also been self-employed for the past 2 years or so. I take on translation jobs. They don't earn me a huge amount but more than £1k per year so enough to get taxed on.

My employer knows that I freelance on the side. I've also told HMRC about my full-time job when I've filled out my last two self-assessments.

Given this, is it likely that my tax code (1257L / 0) is wrong, especially given that 1257L should be for those with only one employer? My hunch is yes but wanted to get people's thoughts before checking with HRMC.

Thank you for your help! 

Your tax code won't need to change if you are paying tax in relation to your self-employment through a self-assessment tax bill. Are you?

baser999

Generally the freelance income would be taxed separately. However, if it’s only £1000 pa HMRC ‘might’ restrict the allowances in your PAYE coding so effectively the tax on your salary includes an element due on your freelance work.
Personally I believe they’ll assess the freelance income separately as clearly it’s a variable amount. As previous contributor has said, what’s happened up until now? 

FrenchieHasAQuestion

Thank you both! I do currently pay taxes separately on my freelance income through self-assessment. The first year was under £1,000 but now it's above that and pay about £1K in taxes, so it sounds like my tax code is right after all  

Dazed_and_C0nfused

FrenchieHasAQuestion said:

Thank you both! I do currently pay taxes separately on my freelance income through self-assessment. The first year was under £1,000 but now it's above that and pay about £1K in taxes, so it sounds like my tax code is right after all  

It isn't really right or wrong, if you wanted to you could pay more tax during the year and pay less via Self Assessment.

Or you could pay it all via Self Assessment.

Or you could (sometimes) pay it in arrears by having the tax owed under Self Assessment included in a later years tax code.

The simplest option by far is what you are doing - standard tax code and paying each January via Self Assessment - but there really isn't a right or wrong option, it's whatever suites you best (within HMRC's constraints).

SiliconChip

The only way it would be "wrong" is if your employment paid less than £12570 per annum, but I suspect that isn't the case.