Paying tax on extra freelance earnings

[Lagirl20]

I earn £51K annually, from one full-time salary. I’m considering doing some freelance work that would bring in around £500 extra a month. I’m assuming I would have to declare this income, and pay 40% tax on it - is this correct? Is anyone else in the same position? It hardly seems worthwhile if I’d be giving up such a large chunk of it...

Put it on your pension if you don’t need it right away. Remember you can claim expenses related to that work as well. A good accountant Is worth their weight in gold if it looks like a long term situation.
But 500 extra on your pension per month is not a bad deal I think.

That’s a brilliant idea! Thanks

If you receive child benefit the effective tax rate between £50k and £60k is even higher; I think pensioning it avoids the reduction there too so another reason to put it in your pension!

In extreme circumstances, the amount you actually see in your bank account if you move from £50k to £60k could be very little.

From that additional £10k, you could pay
£4000 tax
£200 NI (I think it's 2% over £50k)
£900 student loans
plus loss of CB, say you had 2 DC, that's about £1830 pa

Leaving you with just 3070 out your extra £10k earnings.

Class 4 NI is 2% above £50,270 but you’d have to pay class 2 as well I think (c£160/year).

You would be able to claim expenses or the trading allowance of £1,000 (whichever is greater).

Second that put it in your pension (tax free) there are limits based, I think, on a percentage of your earnings.

The limit for tax relief on pension contributions is £40,000 per year (it’s 100% of earnings up to £40,000) unless you’ve reached the lifetime allowance (just over £1,000,000 in your pot).

@Prettyconfused

Put it on your pension if you don’t need it right away. Remember you can claim expenses related to that work as well. A good accountant Is worth their weight in gold if it looks like a long term situation. But 500 extra on your pension per month is not a bad deal I think.

This.