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idiot's guide to tax for an accidental freelancer, please?

(10 Posts)
GertrudePerkins Wed 10-Dec-14 14:43:32

I am currently employed part-time in the public sector on PAYE, lower rate. I've just agreed to take on a tiny amount of work (probably 3 days max) for another public sector organisation, who will be paying me a daily rate directly. Is it just as simple as sticking this down on a tax return at the end of the year? Does the form have details for expenses as well, as I'll be using quite a lot of petrol? I assume I don't need to register as self employed? I am aware that these are very basic questions but this work came and found me, rather than the other way round, and I've only ever been on PAYE blush.

whereisvioleta Wed 10-Dec-14 14:47:45

No help I'm afraid but following with interest as in a similar position.

LadySybilLikesSloeGin Wed 10-Dec-14 14:58:32

You need to have a chat to the tax office as you need a unique tax reference number for your freelance job. You should keep your main job as your first job or you'll be taxed 20% on it, the tax and NI contributions come off automatically which makes things easier for you. You then fill in a tax return, adding both the PAYE income and the income from your freelance job, just make sure you fill in that you've already paid tax and NI for the PAYE to make sure you're not paying this twice. You should only be paying tax and a little NI for the freelance job. You can deduct expenses from the freelance job too, so phone calls, paper, 20% of your gas and electricity if you're working from home and whatnot. The tax office are very helpful so you should go and have a chat and they will give you the right advice incase I've messed up anywhere The tax return doesn't itemise expenses, you just put down the total and deduct this from your income. You do have to keep expenses accounts though, just incase the Inland Revenue want to see them. As far as I'm aware, you can only claim for petrol if you were travelling in the course of your job (so if you needed to go to Sainsburys to collect something for a client), not if you're travelling from home to your place of work.

I'm PAYE and freelance if this helps. I earn more from my PAYE so this is my main job. I work from home so don't know too much about the travelling expenses, but I have to travel to London occasionally and I can claim for these as it's not my normal place of work.

LadySybilLikesSloeGin Wed 10-Dec-14 15:03:43

www.gov.uk/expenses-if-youre-self-employed/overview < expenses that you can deduct.

www.adviceguide.org.uk/wales/tax_w/tax_how_to_pay_income_tax_e/tax_returns.htm < some info about the tax return.

YonicSleighdriver Wed 10-Dec-14 16:27:51

Will the second employer pay you for petrol (other than to your main place of work) - I would have thought they should...

GertrudePerkins Wed 10-Dec-14 18:48:57

many thanks for the helpful advice. I'll get on to HMRC when I'm off work on Friday morning.

Not sure at the moment whether the daily rate is inclusive of expenses - you can tell I'm new to this - but it's still well worth doing if I have to meet my own travel costs.

LadySybilLikesSloeGin Wed 10-Dec-14 19:05:30

You'll be expected to pay for the things you need (transport, equipment etc) from your earnings. It's usual to invoice them your fee at the end of the month, but some can take a while to pay up (I've had friends who have waited for 6 months and have had to go to the small claims court to get paid).

Your daily rate (the one you invoice them) will be higher than your PAYE rate because you have to pay your own tax, NI and expenses (and you won't get maternity pay, sickness or holiday pay), it's usually inclusive of expenses so can work out at less than the minimum wage so please do be aware of this.

It's wise to keep 25% of your earnings from your freelance job in a separate account to pay the tax bill with.

GertrudePerkins Wed 10-Dec-14 19:22:33

thanks again.

the daily rate agreed for an 8 hr day is two and a half times my gross daily PAYE earnings, so will still work out ok once deductions are made. It's public sector so I'm not expecting to see cash in my bank until the summer holidays wink.

LadySybilLikesSloeGin Wed 10-Dec-14 19:24:06

Oh, that's great! smile Just remember to write down your expenses, so phone bill, internet (it would be a proportion of these as you'll be using them for your home too) etc. There's a list on one of the links.

museumum Wed 10-Dec-14 19:27:13

Yes register as self employed. Even if you don't do any other work.
Then just keep expenses receipts and remittances when you're paud and stick it on the tax return. You'll be taxed 20% of the profit as your personal allowance will be set against your paye. Lots of stuff can count as expenses so go through the list and see what you can set against your income - stationary? Printer ink? professional memberships (as long as they are related to your s-e work, even if you'd have them anyway)? The more you count the less your profit so the less you are taxed.

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