Self assessment and PAYE

[The Teacher]

This is probably a simple and common issue, but it's one that's vexed me all the same:

 

• I work part-time, and my employer deducts tax and national insurance through the PAYE system.
  

• I will soon be in receipt of payments for additional freelance work (unrelated to my employer). These payments are monthly and of a consistent value – it's unlikely I will need an accountant to sift through receipts.
  

• I will also be renting a room in my property.
  

 

From my understanding I need to register as a sole trader, but how does my additional income affect my PAYE payments? Do HMRC automatically take into account PAYE when I file self-assessment returns, or do I need to notify them separately?

 

Thanks in advance.

[TJC1]

This is probably a simple and common issue, but it's one that's vexed me all the same:

 

• I work part-time, and my employer deducts tax and national insurance through the PAYE system.
  

• I will soon be in receipt of payments for additional freelance work (unrelated to my employer). These payments are monthly and of a consistent value – it's unlikely I will need an accountant to sift through receipts.
  

• I will also be renting a room in my property.
  

 

From my understanding I need to register as a sole trader, but how does my additional income affect my PAYE payments? Do HMRC automatically take into account PAYE when I file self-assessment returns, or do I need to notify them separately?

 

Thanks in advance.

 

Hi,

As a sole trader the income tax threshold will apply on your first job. E.g. the amount you pay no tax on.

N.I is also deducted as usual.

 

You will need to pay income tax on the rate above that on your self employed earnings.

 

just register with HMRC asap...when it is time to do your self assessment you will put employed earnings and other income down and its taken into account. For you this will be 31 Jan 2017 If completing online.

It goes on previous yax year.

 

If its a small amount of self employed earnings you might wish to do yourself...keep good records on excel or sage or freshbooks and file receipts. It will save you a lot of hassle!

 

If using a bookmaker or accountant I can recommend someone very inexpensive. Just PM me if you require.

 

Any more questions happy to help.

 

---------- Post added 17-09-2015 at 13:04 ----------

 

The standard personal allowance will rise from £10,600 in 2015/16 to £11,000 in 2016/17.

 

---------- Post added 17-09-2015 at 13:06 ----------

 

So if you earn 15k in job one, that uses up your personal allowance....you pay a tax rate in the next band on self empoyed earnings.

[Hopman]

 

If using a bookmaker or accountant I can recommend someone very inexpensive.

 

Book-keeper, methinks?

[TJC1]

Book-keeper, methinks?

 

I don't because I've got accountancy quals and skills / excel / p & l / gearing and ratios etc for non-specialists (Not a qualified accountant).

 

but I do get advice and use an accountant for returns. Saves time and hassle and accurate tax liability.

 

I would recommend a book keeper if you don't feel confident keeping good records / systems. An hour per week or every other week should suffice.

[Chez2]

TJC1 - you were being corrected as you put bookmaker not keeper.

 

To the op - you would be better paying an accountant for one day a year to advise you and go over your figures. It should not be expensive and could save you more than the cost of their time. My husband used to use one when he was full time employed as we used to invest in stock and shares. We used the accountant to make sure we were correctly declaring everything. The accountant spotted errors the full time employer had done so it got put right with HMRC. They also advise on other issues such as what you can and can't do with various expenses, claiming car and mileage etc.

[TJC1]

TJC1 - you were being corrected as you put bookmaker not keeper.

 

To the op - you would be better paying an accountant for one day a year to advise you and go over your figures. It should not be expensive and could save you more than the cost of their time. My husband used to use one when he was full time employed as we used to invest in stock and shares. We used the accountant to make sure we were correctly declaring everything. The accountant spotted errors the full time employer had done so it got put right with HMRC. They also advise on other issues such as what you can and can't do with various expenses, claiming car and mileage etc.

 

Oops! I type fast with auto spell...

 

I agree, an accountants advice is invaluable. They often point out things missed you can be claiming and keep abrest of hmrc and legal developments.

[The Teacher]

Thank you TJC1 and Chez2, this is helpful. I'll give it some more thought.

[JoGreveson]

Hello

 

It can seem confusing at first, when you have two elements of income, i.e., one taxed at source, and the other taxed via self-assessment.

 

The first thing to do is register with HMRC as self-employed, this will enable you to set up a self assessment account online, so that you are ready to complete your self assessment after the tax year ends on 5th April 2016.

 

Also, start to save receipts for expenditure relating to your self employment.

 

When you complete the self assessment after the tax year ends on 5th April 2016, you will fill in the employment pages, entering gross salary, as well as tax deducted at source. You will also complete the self employment pages, entering gross receipts and allowable expenses, to calculate net taxable income from self employment.

 

The software automatically calculates your total income for the tax year, and deducts allowable expenses and personal tax free allowance (personal allowance for the current year 2015-16 is £10,600). The tax due or repayable is calculated automatically.

 

I hope this helps, and if you want to contact me, I have recently started my own book-keeping/accounting business, and I am providing self assessment returns to new customers at £75. This includes advice on allowable expenses and record keeping, help with setting up your self assessment online account, and processing your year end tax return. I can advise you on your choices regarding payment of tax, depending on your personal preference. For example, if you expect your self employed income to be higher than your employed income, and you are worried about a high tax bill at the end of the tax year, you can request that your tax code is changed to BR, so that all of your employed income is taxed at source, resulting in a lower tax bill on your self employed income, or a tax rebate.