Tax and freelance work?

Acathla · 23 May 2007 at 13:05

Hi all,

bit confuzzled here and wondering if any of you smart people might be able to help me!
Basically, I currently work full time and have just had an offer through word of mouth to do some programming work freelance. It is good money, and I have already looked at the timescale around doing this at the same time as my 'real' job, but just wondering if anyone knew about the tax implications? I assume I need to pay tax on this, and how do I even go about that?
Tried googling a bit, but all the freelance finance stuff seems to be if that is all you do (which I would love in the future, but can't give up the 9-5 grind just yet!)

Cheers for any help!

Mr Nice · 23 May 2007 at 13:12

Well, one of two things you can do. You *could* just get paid cash in hand and keep quiet about it.

Or if you wanted to do everything by the book, you need to look into Umbrella companies. These help contractors deal with invoicing, tax etc.

Pipe & Slippers · 23 May 2007 at 14:23

If you want to do it properly, you should inform the Revenue (I think within 3 months) that you are in receipt of another source of income and they'll probably treat it as if you are a sole trader and your year end will run from 6 April 2007 to 5 April 2008, and tax you accordingly (what 'accordingly' actually is I don't know anymore - long time since I did this sort of stuff)

The easiest way for you and the taxman, although not the official way, is for you to contact the Revenue after 5 April 2008 and request to fill in a tax return for 2007/8, and declare the income on that (minus any legitimate expenses of course!). If the income is of a one-off nature and not ongoing, make it very clear. What you don't want the Revenue doing is assuming that the income is ongoing and adjusting your tax code accordingly resulting in you paying the tax on your paye income and your anticipated freelance income through your employer's payroll

If the freelance income is going to be regular and ongoing, you'll need to take advice - surprisingly the Revenue and normally quite happy to help/advise

If I were you I'd do what I said in the second paragraph and take it from there

Oh yeah - make sure you put a percentage of you extra earnings away in order to meet the tax bill - not doing so is a common mistake

Acathla · 25 May 2007 at 12:02

Sorry for the delay in reply, been away a few days!
Yes, this is just a one off (for now at least!). I think giving the IR a call is probably the best idea. Of course I would like to just take it and keep quiet, but it is a bit much to do that with and the people paying me would be putting it through their books so it would be very trackable!

Cheers for the help!

Admiral Huddy · 25 May 2007 at 12:09

No need to call them.. just declare it on your self assessment after next tax year end (5th April) ... If it's cahs, then it's upto you whether you declare it or not.

If it becomes a common occurance, then you will have to declare to the HMCR that you are earning money from self employment source regardless if you are in full time work. There is a fine for not doing this, so be carefull.

details and forms here..

http://www.hmrc.gov.uk/selfemployed/iwtregister-as-self-employed.shtml

The form has a box to indicate that you are in full time work. You may get a letter asking to pay class 2 NI, if your self employment income is less than 4k (i think) you can be exempt from this if your are receiving an income from an employment basis (class 4). This is another form on the site.

By law, you should declare your earnings to the IR each year where you have received additional income.