Self employed and PAYE in same tax year - is it a problem?

clarkeycat

I am currently self-employed, but I am considering taxing a PAYE job for 3 - 6 months, after which I will return to being self-employed.

I have been told by friends and family that this will cause a problem with my taxes, that I will be taxed more etc, but no one can tell me why exactly this is.

Any thoughts welcome!

[Deleted User]

You will be taxed more if you earn more - it’s as simple as that and you will have an extra section to complete on your tax return. 

I would probably just ignore your friends, at least when it comes to income tax!

Dazed_and_C0nfused

clarkeycat said:

I am currently self-employed, but I am considering taxing a PAYE job for 3 - 6 months, after which I will return to being self-employed.

I have been told by friends and family that this will cause a problem with my taxes, that I will be taxed more etc, but no one can tell me why exactly this is.

Any thoughts welcome!

They haven't told you because, in Donald's words, it's fake news.

The one thing you will need to decide is how to complete the new starter declaration your new employer should ask you to complete.

You have two options, tick statement A and you will be put on the emergency tax code (1257L) on a cumulative basis.  This means you will only pay tax once your earnings (from the PAYE job) exceed an average of £1,048/month as you go through the tax year.

For example wages at the end of May (month 2) would need to exceed £2,096 for tax to be deducted.  And by the end of June (month 3) that becomes £3,145.  And so on.

Alternatively tick statement C and you will be put on tax code BR and pay 20% on each payment.

If either you or your employer don't comply with the new starter process then they will use tax code 0T.  Which in practice is likely to mean 20% will be deducted each pay day.

You include the earnings and and tax deducted on an employment page when you come to complete your return.

clarkeycat

Thank you both, much appreciated. I will go ahead and crack on and make sure the paperwork is done properly!