Employed but also Freelance ... how does tax/NI work?

[MrsBojangles]

why is it so hard to find suitable part-time work? but that's anothter topic

Anyhow I've come across a few opportunities which are about 10h per week worked each so could be combined. However one position would be as an employee whereas the other position would want me to work for them in a self-employed capacity.

So how on earth do I work out the tax on THAT?!?

It's not hard. My ex husband and I often had a full time job plus self employed income. Your employer takes off tax in the usual way and your self employed payer gives you the gross money and then you put all the income on your tax return each year and HMRC works out your tax and NI for you due on the self employed income and you pay that twice a year (so make sure you retain enough to pay the tax)

okay - you have to do self assessment, but it's really easy

you'll get a P60 each year with your tax and ni on your employee (PAYE) job

and then you'll need to keep records for the other (including any expenses - as it would be freelance that could include travel to and from the office if your 'business base' is at home)

and you need to tell the tax office that you are self assessed

as a self employed person you pay class 2 NI contributions of £2 a week but if you make less than about £4,500 self employment income a year you can apply to be exempt. Depending on your income it might be worth paying them voluntarily anyway to make sure you have NI contributions towards pension etc.

the absolute best thing to do is go to the inland revenue website, find your local office and make an appointment with you. They can tell you what records to keep and what part of the (unbelievably massive) forms you need to fill in, and what the deadlines are. They are really, really helpful and are most interested in helping you sort things out rather than being interested in trying to spy on you or bleed you dry

good luck with the jobs! don't be put off by self-assessment - it's not scary at all. It can even benefit you - you don't have to pay your tax for the year straightaway so you can put it away in a high interest account and make money on it till they want it!

thanks for that another question though... how will doing freelance on the side affect my tax code for the paye job or wont' it?

It doesn't, it all gets sorted out by the magic tax fairies (or so the nice Inland Revenue bloke on the phone told me... OK, so he might not have used those exact words )

You might choose to have the tax on your self employed income taken off your earned income I think if you choose that or else you decide to pay the tax on that separately twice a year so it won't affect things. You won't pay any higher rate of tax on your employed earnings at all. But you do need to check the calculations each year to make sure they haven't worked it out wrong.

MrsBo if you specify that you don't want them to collect it through your tax code you can just pay it as a lump sum

you have to say that though

thank you so basically treat the IR as dumb and tell them exactly what I want I can do that I think

no I never said that!

I said they were helpful!

don't worry I won't tell them

[puzzled]

I like confusing people simply because confused is the state I'm usually in