Second income - where to start

[Babyshine2020]

Hi, I was wondering if anybody could help. I've tried to Google this but I'm just lost in a minefield.

I will try and give as many details as possible to not waste anybodies time.

I am currently employed full time (£19000 salary if that's relevant) as a finance assistant and I've been asked by my husbands friend to help him out (paid) on the side. He himself is self employed but does not want to "hire" me and wants me to invoice him for my time.

Now how does this work? It'll be casual in a sense of doing his books/paperwork/invoices etc when it needs doing (weekly) but no set hours.

Do I need to set myself up as self employed?
I know I'll have to set money aside for a tax return at the end of the year - would this be next April?
We've figured out between us this will be worth around £5000/year pre-tax which will still keep my income in the basic tax rate, but with it being a second income would that mean more tax anyway?

As you can see, I'm completely lost and I don't want to make a rod for my own back..

Can't help, but interested to see replies!

You'll have to set up as self-employed. On the online form you can tick a box for employer. Make sure you have your P60 form there so you can complete that section. Then you tick a box for self-employed. You'll have to put in his name and address and then say how much you've earned over the period of time. So in your first tax return in July you'll only have earned a couple of thousand, won't you? Then you answer a million questions about whether you own properties abroad etc etc and then it will calculate how much tax and NI you will have to pay. As a guideline set aside 29%, as you have earned your tax free sum with your salary. If you have any costs, they will be offset against your earnings.

I would apply to HMRC in writing when you start the job. They will write with a number for you to use when setting up the online form. You can't set it up without that number.

Thats brilliant, thank you.
I've been reading up on it some more and it seems as though I won't nee to do any tax returns until next year? Ill set up as a sole trader as of when we finalise everything, and then its just a case of putting tax and NI contributions to one side..

How much will you earn? If under £1000 you don't need to set up as SE and can earn it tax free

Why will you be self employed? It’s not a choice
Check the CEST tool on the HMRC website to see if you are employed or not, there are very specific criteria around substitution etc that makes you self employed, it’s not just a simple as someone not wanting to employ you

She's already got a full time job, @Hoppinggreen. This is just a job for a friend - he's obviously not going to employ her, with all the red tape that that involves - just for a few thousand a year when he only wants work on an ad hoc basis.

It makes no difference if she already has a full time job or not. That isn’t one of the criteria. You can have more than 1 job
It’s not up to me, OP or the person who wants her to work for him, it’s up to HMRC and if she gets it wrong there could be repercussions for her.
I am not saying she shouldn’t do it or that she definitely IS an employee, I am saying she should check