For many years, I've done a £30 a week cleaning job for an elderly couple I know - just 2 or 3 hours of light cleaning, home help, errands and sometimes a bit of household admin. They pay me a fixed rate monthly by cheque and this is how we've always done it. To be honest, these days I do it as much as a favour to them as much as a moneymaker.
I never felt guilty about not declaring the cash in hand earnings as even with my other part-time PAYE job, I was nowhere near being a tax payer. However I've recently taken quite a few extra hours in my main role which for the first time has tipped me over the tax threshold by a couple of thousand pounds a year. So unquestionably I should be paying tax on the cleaning job earnings too.
My question is - what is the best way of declaring the earnings and paying the tax I owe? The old couple certainly don't want the liability and hassle of taking me on as an employee. I don't mind doing a tax return if I have to, but surely I don't have to set up my own company and file accounts to take these minuscule payments? Or if that's the only way, where would I even start with this?
The alternative is that I give up the elderly couple but I know they would be upset and would struggle to find anyone to else do the range of tasks that I do. Or tell them to stop paying me, that I'll just do as a favour - but I know they would be uncomfortable with that.
Any advice would be appreciated.