Self employed & working full time

[softscoop]

What are the rules and regs of working both as a full-time employee, and doing some self employed work in my spare time?

I ask as I've been doing a fair amount of IT work for friends, friends of friends etc, and at the moment, it's all cash in hand.

I'd like to start advertising in the local paper etc to get a bit more business going, and I'm not sure the best method of making it all legit and above board?

[GentleGiant]

The rules and Tax regs may have changed since I did it, but basically it is a nightmare.

In theory it should all be fairly straightforward (although complex), but HMRC are totally "non compos mentus" and made my life a misery by sending spurious tax demands and messing up my employed and self employed documentation nearly every year, including for several years AFTER I stopped being self employed.

I THINK there is an earnings limit, below which you do not have to register, but I would go talk to an expert, or ask at your local CAB for help.

[moley]

What are the rules and regs of working both as a full-time employee, and doing some self employed work in my spare time?I ask as I've been doing a fair amount of IT work for friends, friends of friends etc, and at the moment, it's all cash in hand. I'd like to start advertising in the local paper etc to get a bit more business going, and I'm not sure the best method of making it all legit and above board?

I hope the tax man didn't read the bit about 'cash in hand'

I've been self employed for nearly 10 years and I've never had any problems. You can register your business as a sole trader. You really need an accountant and run the business through a separate bank account. You will also need public liability insurance, so for the amount of work you could be doing it might not be cost effective. There is a guy near me that works for a garage and for years he has offered service and repairs to cars at home on a Saturday, last year the tax man caught up with him and he has had to pay a large bill as they calculate how much he earned over x amount of years.

If you can build the business up by offering the right service at the right price you might go fully self employed and sub contract to your current employer.

Good luck.

[GentleGiant]

mokey. are you also an employee somewhere else?? This was my problem, the HMRC could not seem to understand that I was both, so would get their knickers in a twist.

It was useful in one way, they used to have to send me a refund every other year, everything from £70 to £1600!! An easy way to save up some money for a holiday!!!

[softscoop]

mokey. are you also an employee somewhere else?? This was my problem, the HMRC could not seem to understand that I was both, so would get their knickers in a twist.

It was useful in one way, they used to have to send me a refund every other year, everything from £70 to £1600!! An easy way to save up some money for a holiday!!!

This is what I'm worried about! My brother is self employeed, and he has no problems, because he is purely self employeed.

Everything on the web I read is about giving up your job, and going fully self employeed. I'm not quite ready to do this yet!

[Llanigraham]

Having been in this situation for a short while I had no problems at all. HMRC are different now and are very approachable. Give your local office a ring and talk to them, you might be surprised how helpful they are.

[yegnold]

I'm in this situation and have been paying tax on my self employed earnings for the last 4 years through the self assessment scheme

Something that bugs me and I;m not sure if it quite right is I get a quarterly N.I bill of £31.20.

This ALONGSIDE the huge amounts of national insurance I pay on my salary.

Should I really be paying those N.I contributions, and can I get them back if I shouldn't be? My profits every year in my self employment are *well* below £5000.

[Llanigraham]

I'm in this situation and have been paying tax on my self employed earnings for the last 4 years through the self assessment scheme

Something that bugs me and I;m not sure if it quite right is I get a quarterly N.I bill of £31.20.

This ALONGSIDE the huge amounts of national insurance I pay on my salary.

Should I really be paying those N.I contributions, and can I get them back if I shouldn't be? My profits every year in my self employment are *well* below £5000.

On the bill does it say whether it is for Class 2 or 4 NI?

I suspect that it is Cl4, so yes, but there is a guide to NI payments on the HMRC web site.

[sharkrider]

I do this. work for the ambulance service AND self -employed driving instructor, you just have register and complete a self assessment every year, its not too hard.

I also used to work for HM revenue & Customs. you don't have to pay NI on your self-employed earnings, if you pay enough NI on your employed earnings. I'm exempt from NI on my self employed earnings, and I suspect anyone else in full time employment is too

PM me with q's as I just skipped through the thread.

[devonutopia]

If you don't have NI to worry about. you simply just need to do a basic profit and loss for your self employment (obviously advertising is a tax allowable expense). Tell HMRC you have self employed income and this will go on your tax return, along with the details of your employers P60, and you end up with a "total earnings" and all tax paid in employment comes off your total tax bill on all earnings.

I am going to have to go down this route when I do my first S/E detailing session. I am hoping to do a few this summer.

[sharkrider]

my job at HM revenue and customs was Assistant Officer - tax office, I used to answer calls on PAYE and the self assessment helpline, so feel free to use me

and yes Jason, you're right, you don't have to pay class IV NI if you are full time employed too....... only if you are "just" self-employed (assuming you want a state pension)

Edited 6 February, 2011 by sharkrider

[softscoop]

Thanks for the advice guys.

I think I'll have a word with our accountant at work on Monday and see what she reckons as I've no idea whether I'm paying enough NI to mean I don't have to pay any on SE earnings.

Sharkrider you may be getting a PM

[yegnold]

On the bill does it say whether it is for Class 2 or 4 NI?

I suspect that it is Cl4, so yes, but there is a guide to NI payments on the HMRC web site.

From memory they are listed as class 2 contributions

http://www.hmrc.gov.uk/working/intro/class2.htm

That is, I get a flat rate of £31.20 a quarter regardless of how much/little money I have made in self employment

Edited 7 February, 2011 by yegnold

[Llanigraham]

Cl 2 then.

If your profits are low from your S/E then you may have been able to claim Exception from paying them, look at the 5th link on that page.

[devonutopia]

class 4 NI is based on percentiles of your profit of the last year if remember right. So the £2.40 a week, or whatever it is now, is class 2.

Best way to think of it is imagine you had £20k salary, paid £4k in tax. You had £5k of self employed income, 1k of costs. You'd basically say you earned £24k, tax bill would be around £4.5k perhaps in all? Knock off PAYE and so you just have £500 to pay by 31st Jan following the tax year cut-off (5th April obviously)