So for the last 3 years i have worked for the local council. I work just one day a week and get paid 'expenses' of £60.
Each week, i submit an invoice and im paid this £60 directly into my personal bank account.
I had, wrongly, assumed that because i was below the threshold for paying tax i dont need to declare it. I now know this is wrong so am keen to remedy it.
I have now been asked to work two days a week for £120. To be honest, its not really 'expenses' as i have none, its is wages.
So im assuming id be considered self-employed, so will need to declare earnings for tax and ni. Is this right? Should i go back over the last 3 years and declare everything that i have earned? Will i be fined for not doing it before now?
I have been on the HMRC website, but still a bit confused!
Id be really greatful for any of your help or advice. Rhona
I'd call up HMRC self employed helpline you'll need to register as self employed (if that's what you are, you might not be considered self employed as you work for one place only). If you call, they can advise you.
£60pw is below the threshold where any tax or NI is due so you shouldn't get a fine for that, but if you have received any means tested benefits - particularly Tax Credit - you should have been declaring this income.
Whether this is employment or self employment is up to the council to work out really (and if HMRC decide they got it wrong it is the council's problem). If it is going to be self employment you do need to register and start paying Class 2 National Insurance as the threshold for this is £5,725pa - although you could be just under that; it may be worth paying anyway (it is only £2.70pw) as it gives credit towards the basic state pension which you might not otherwise be getting, and it also entitles you to some other benefits particularly Maternity Allowance.
If this is your only income you won't have to pay any more National Insurance until you earn £7,755pa, and no Income Tax until you earn £9,400.