Full time PAYE job and tax implications from making money from own business

[MadameGazelle]

Hi - hope someone can point me in the right dirction with this. DH has a full time position but wants to set up his own business to run alongside this and keep his full time job going, his earnings on his second job would be in the region of £5,000 per year, but I was wondering where we stood regarding tax and NI on any money that he makes from his second business. Obviously the money he makes from his FT position is guaranteed and Tax and NI is taken at source, but how do we go about sorting this out for a very unpredicatable second income?

TIA

You call up the inland revenue and he registers as self employed for his 2nd income. Then he fills in a self assessment at the end of the tax year.

Great, thanks didn't think it would be as simple as that

Also any tax owed on the £5,000 per year from his second job can, if he likes, usually be deducted from his other FT PAYE pay by the tax office informing his employer of an adjustment to his tax code.

It saves on having to keep back some of his profits to pay a future tax bill.

Hi RogerandPatricia, do you pay tax on the first £5,000 only

No you pay tax on all earnings with the exception of the current annual allowance which is £6495 (can be lower if Tax owed from previous years and/or any taxable benefits)

Rogerandpatricia was meaning that his current FT code can be adjusted so that the tax on the projected £5000 is paid throughout the year and you are not faced with a tax bill post SA.

Tax on the £5000 will be paid at either 20% or 40% depending what Tax bracket your OH falls into. He will alsp pay NIC on this additional earnings - Class 2 of £2.40 per week and additional NIC once SA is completed.

SA for the year ending April 11 will only be due in January 2012 (if you submit online) and tax must be paid at this point. You could as a rule, which is what we do, put 40% in another account and not touch it, so you have the money to pay the tax bill when it comes and maybe have a little bonus saved.

Hi abcmum - thanks for that, can you tell I am new to all of this .