Tax on Self Employed Income (when also an Employee under PAYE) - query

DIYhelp76

Hi,

Pls can anyone advise re a query on paying tax on self employed income?

The person is already employed full time (PAYE).  They complete Self Assessment Tax Returns already due to rental income.

Last year they started doing additional self employed work - on very small scale basis - 1st year earnings were less than £600.

We read that if "self employed" earnings are under £1,000 they are exempt, don't need to be reported and no tax is payable.

Is this correct and is it also correct where the person is also an employee?

Many thx in advance.

Dazed_and_C0nfused

Providing there isn't a link between the employment and self employment then yes, they can use the trading allowance rather than claim any expenses.

Sometimes there can be a (significant) benefit in paying voluntary Class 2 National Insurance in this situation but if they have been earning over the LEL at their employment it's unlikely to be worth paying the Class 2 NI.

https://www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance

And using the trading allowance doesn't prevent use of the similar allowance for rental income (if they have expenses < £1k).

Wellimsailing

Dazed_and_C0nfused said:

Providing there isn't a link between the employment and self employment then yes, they can use the trading allowance rather than claim any expenses.

Sometimes there can be a (significant) benefit in paying voluntary Class 2 National Insurance in this situation but if they have been earning over the LEL at their employment it's unlikely to be worth paying the Class 2 NI.

https://www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance

And using the trading allowance doesn't prevent use of the similar allowance for rental income (if they have expenses < £1k).

Hi - I don't know if I can jump in on such an old post, but in that situation (low, under £1K self employed earnings but higher, but not tax paying PAYE earnings), does that mean the self employment doesn't have to be detailed at all on a self-assessment form and only what the self-assessment form is being completed for? (Other unrelated reasons). Or would it specifically need to be noted to effectively receive the trading allowance.

Dazed_and_C0nfused

Wellimsailing said:

Dazed_and_C0nfused said:

Providing there isn't a link between the employment and self employment then yes, they can use the trading allowance rather than claim any expenses.

Sometimes there can be a (significant) benefit in paying voluntary Class 2 National Insurance in this situation but if they have been earning over the LEL at their employment it's unlikely to be worth paying the Class 2 NI.

https://www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance

And using the trading allowance doesn't prevent use of the similar allowance for rental income (if they have expenses < £1k).

Hi - I don't know if I can jump in on such an old post, but in that situation (low, under £1K self employed earnings but higher, but not tax paying PAYE earnings), does that mean the self employment doesn't have to be detailed at all on a self-assessment form and only what the self-assessment form is being completed for? (Other unrelated reasons). Or would it specifically need to be noted to effectively receive the trading allowance.

You might find the paper tax returns useful, in particular page TRG2.

https://www.gov.uk/government/publications/self-assessment-tax-return-sa100

To be clear, you include any relevant details in a return.  So if you have been employed and received income (from employment) in 2023-24 then you cannot just ignore the employment pages.