Taxation on multiple income streams (From current wageslave PAYE only income)

in Boost Your Income
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Hi, I've been putting this off for far to long already. Hopefully the discription give the gist of my situation but basically ealry 50's earning 31K have been paye since i left school and am worried about my financial future, Have workplace pension in place but i know it won't be enough for me and the better half in retirement.

 I have a few skills that i have learned over the years that i feel i may be able to earn some extra money from, but i have no idea about how i would go about setting up taxation on them as a self employed part time worker, I want to do this totally "Legit" from the offset so if anyone could give me a few pointers i'd really appreciate it.

 This would be from 3-4 "Side hustles" So is it best to set up as a single person (Entity? sorry not sure of the term) and have all payments to one account and keep book keeping for each "Hustle" Or do i have to set up as a business for each one?

 Side note I'm not looking to make "Millions" on this just a little extra to top up the pension pot and maybe given time look into other investments.

Again any help is greatly appreciated.
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Replies

  • digitallife555digitallife555 Forumite
    7 Posts
    Name Dropper First Post First Anniversary
    Thanks, This have given me a lot to look into including a few more links on the HMRC site.
     Still not totally sure on how to go about this as in for example having 1 income coming in from Amazon, 1 From a stock photgraphy site, and another from somewhere else. Would i just set up as "Joe Bloggs" etc for all and keep each income/expense stream in a seperate book and tally up the total at the end of each tax year or not ?
     Sorry if i'm still green on this, if someone else has several isde hustles is this how you go about it ?

    Thanks again for the help so far though, i'll be looking into whats advised already with appreatiation.

  • lisyloolisyloo Forumite
    27.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper
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    Not sure how you'd set up the companies but as far as multiple income streams go I use self assesement.
    I fill out my tax return around June (after getting P60 in May).

    I pay 31st Jan and 31st July for the tax year ending on 5th April.
  • digitallife555digitallife555 Forumite
    7 Posts
    Name Dropper First Post First Anniversary
    lisyloo said:
    Not sure how you'd set up the companies but as far as multiple income streams go I use self assesement.
    I fill out my tax return around June (after getting P60 in May).

    I pay 31st Jan and 31st July for the tax year ending on 5th April.

    Thanks for the reply :)
  • General_GrantGeneral_Grant Forumite
    3.5K Posts
    Ninth Anniversary 1,000 Posts Name Dropper
    ✭✭✭✭
    Thanks, This have given me a lot to look into including a few more links on the HMRC site.
     Still not totally sure on how to go about this as in for example having 1 income coming in from Amazon, 1 From a stock photgraphy site, and another from somewhere else. Would i just set up as "Joe Bloggs" etc for all and keep each income/expense stream in a seperate book and tally up the total at the end of each tax year or not ?
     Sorry if i'm still green on this, if someone else has several isde hustles is this how you go about it ?

    Thanks again for the help so far though, i'll be looking into whats advised already with appreatiation.

    Are you able to use Excel (or other spreadsheet software)?  You could keep each area of income on a separate sheet within the book so you would be able to see whether one activity was truly worth continuing.  Then you can draw the totals from each of the sheets into another one which would give you totals for all your sidelines.
  • digitallife555digitallife555 Forumite
    7 Posts
    Name Dropper First Post First Anniversary
    Thanks, This have given me a lot to look into including a few more links on the HMRC site.
     Still not totally sure on how to go about this as in for example having 1 income coming in from Amazon, 1 From a stock photgraphy site, and another from somewhere else. Would i just set up as "Joe Bloggs" etc for all and keep each income/expense stream in a seperate book and tally up the total at the end of each tax year or not ?
     Sorry if i'm still green on this, if someone else has several isde hustles is this how you go about it ?

    Thanks again for the help so far though, i'll be looking into whats advised already with appreatiation.

    Are you able to use Excel (or other spreadsheet software)?  You could keep each area of income on a separate sheet within the book so you would be able to see whether one activity was truly worth continuing.  Then you can draw the totals from each of the sheets into another one which would give you totals for all your sidelines.

    Hi, This is something i have to Re-teach myself as its something that was only briefly touched on when i was in collage many moons ago, but this is the way i was thinking of heading towards, i have a copy of Libre office installed so with that and a few youtube tutorials or maybe a cheap Udemy course i hope that should point me in the right direction, I may even see what Udemy have with regard to side hustle business courses relating to setting one up although i have a feeling there will be a lot of "Fluff Courses" and most more geared towards the US market, Still planning on taking this slow for now as a PAYE salve im still far to used to having all tax related things "Done for me" But so far everyones replies have been extremely helpful.

    Thanks !
  • wegptremwegptrem Forumite
    33 Posts
    10 Posts Name Dropper
    Hi there,

    I started out like you, using my skills to supplement my income before becoming full time Self Employed.

    First and foremost, although I doubt this will apply, be sure that your current employer allows you to work as a side job - if you are in breach of contract you could lose your job or even get sued.  Most companies have no policy in place for employees working on the side, but some do, so worth checking.

    As I understand it, you would have multiple income streams.

    You don't need a business for each individual stream - you would have to register each business with HMRC as self employed, opening and closing businesses, when one steam dries up and you need to replace it with another, is way too complicated and time consuming.

    One business name to cover all streams is all you need, you can then drop and diversify the streams within your business as convenient to you.

    'Joe Bloggs Enterprises' would cover you for just about anything, but you will have to specify what your business is going to cover when you register as self employed, you might get away with 'online income streams' but they might want you to be a little more specific.

    You will need a bank account - not necessarily a fee-bearing business bank account, a new (and free) personal account is okay too, providing it is solely for your business transactions.

    To keep an eye on which stream is profitable enough to continue with, General Grant's Excel sheet is a sound idea, or you can simply use a note book and pen for each stream.  Then use the combined totals for your tax return.

    So long as you have records of your profit and loss, income and expenses, that is really all the taxman needs on your Self Assessment.


    So to recap.
    - Check to be sure your present job will allow you to work on the side.
    - Open a bank account for your business transactions
    - Choose a business name, or just use your own name if you prefer.
    - Register (in your case, as a Sole Trader) with HMRC as soon as you are earning £1,000 /year from your business.
      Go to the gov dot uk website, and in the address bar add this to the url: /set-up-sole-trader/register
      (sorry, the system won't allow new members to post links)
      Formalities can take between 10 and 14 days

    After registering you will be paying Class 2 National Insurance contributions (£3.05 a week) if your business profits are £6,515 and over / year, or Class 4 if your profits are £9,569 and over (9% on profits up to £50,270 and 2% on any profits above that)

    At declaration time, you will receive your Self Assessment - it can be done online.  
    There is a box for your Employment earnings, and another section for the Self Employed.

    For Employment, you simply enter your 31K annual wage to the nearest whole pound.
    For the Self Employed section, simply fill in your Turnover, Expenses and Profit - it's really very easy.

    Any business profit of over £1,000/year is subject to income tax.

    Hope that makes sense, and good luck with your endeavours.

  • digitallife555digitallife555 Forumite
    7 Posts
    Name Dropper First Post First Anniversary
     Thanks this is EXACTLY what i was looking for, In fact it's probably to good as it reminded me i have no idea what is in my current contract (Time to get in the loft and sift through 15+ years worth of work related bumpf)

     That being said if i were to only make e.g £995 total for 2 years running does that mean i wouldn't have to register for those 2 years ? (Obviously i hope to make more but just to make sure i have to ask) ;)

    Thanks for the breakdown of info just what i was looking for!
     

  • wegptremwegptrem Forumite
    33 Posts
    10 Posts Name Dropper
    Hmmmm - you will want to check, but this is my understanding:

    The special tax allowance you will come under is called a Trading Allowance.  

    The Trading Allowance pertains to turnover, not profit - so keep that in mind.

    You would not pay tax on your hypothetical £995 turnover a year until the law changes - meaning if the rules stay the same, and your sideline business turnover is £999 a year for the next 50 years, you will not have to declare nor pay tax on it.

    Remember:  It's only when your side-line *turnover* (not profit) exceeds £999 a year that you need to register for Self Assessment and let the taxman know.

    Anything under a thousand and the man from the ministry is not remotely interested.

    Once your turnover hits £1000 a year, then you must register your business, apply for Self Assessment and so on.

    However, I would strongly advise you to get a bank account solely for business use and keep records, even if they are in a folder or notebook - that way when your business booms and your turnover takes you over the limit, you have the paperwork behind you..

    Hope that helps :)

    Good luck in the loft, and 'ware 8-legged lodgers !


  • digitallife555digitallife555 Forumite
    7 Posts
    Name Dropper First Post First Anniversary
     Thanks for the fast reply, I'll certainly be getting a bank account just for business use and to start off i'll probably keep written records as well as on a spreadsheet (probably keep a written record along side as a back up incase the PC goes up in smoke).
    Still have a lot more "Research" to do, but Rome wasn't built in a day and im at the age that although the world moves fast, i'll still be happy going at my own pace.
     Thanks again, Cheers!

    And Yeah 'Tis a shame i can't charge those 8 legged freeloaders rent as well ! :)
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