Tax: can I allocate my tax-free amount or is is automatically chronological?

[Zorra]

I work for a non-UK company but live in the uk and will pay tax here through self assesssment. I am a staff member April-December this year and they will pay the tax (it's not automatically deducted because they aren't British). I will be working as a consultant from January 2014 and will pay my own tax. Is there a way I can apply my tax free allowance to my consultancy earnings and have the lions share of the years tax bill paid by my employer? Or is it just applied to the first chunk of money that I earn? It will make a big difference to me as I'm working reduced hours from January, and my company is ready to pay as much tax as I ask for. Thanks!

If you will be paid income on which income tax will be due when you are self-employed/employed by your own Ltd company, then it won't make any difference to your tax bill this year how the tax is divided between your present employer and your consultany.

As a general rule, if your income falls during the year, you will have paid too much tax during the good months. If you are moving to consultancy your income per hour is presumabaly rising (I hope!) but this may be counteracted by the fall in your hours.

If you are going to do your consultancy work through your own limited company and you are not going to fall foul of the IR35 trap, then you need to take some professional advice on how to structure your "income" so that you minimise your tax - chiefly through paying dividends. If this is possible, then you want your current employment to pay the MINIMUM of income tax possible, not the maximum (though it will all come out in the wash in the next tax year after you complete a tax return and a rebate is due).

Thanks Manzanilla. Because its a foreign company, it's not paye so I just pay a big lump of tax at the end. Think I might pay for some advice as I don't really know what I'm doing!