Tax on income outside PAYE

[Kosenurm]

Hi there

I currently am employed and pay PAYE tax correctly.

I do, however, do some work outside of this. I wrote to HMRC to tell them of this, and they said that as long as the earnings do not exceed £2100 (I can't recall the exact figure without finding the letter, but it was around this), I do not need to declare this/complete a tax return.

The thing is, I think that this year the earnings might go above this, so I will need to declare this. I am doing the extra work in addition to my employment, so its just 'extra' rather than being self employed.

My questions are

1) Whats the easiest and most straightforward way of doing this? I don't want it to affect my employed PAYE or NI contributions!!
2) By doing this work, I will incur some costs. Can I claim the tax relief on these?

Thanks,
K.

[ostell]

Re: Tax on income outside PAYE

My understanding of the rules is that you need to declare everything.

Perhaps there was a misundertanding by HMRC when you got response you did.

You pay tax on earnings. If there was costs in creating those earnings then of course you deduct those first to give the nett earnings.

[Kosenurm]

Re: Tax on income outside PAYE

My understanding of the rules is that you need to declare everything.

Perhaps there was a misundertanding by HMRC when you got response you did.

You pay tax on earnings. If there was costs in creating those earnings then of course you deduct those first to give the nett earnings.

Thank you for your reply. To declare income, do I just simply register for Self Assessment online? Will this not touch my employed PAYE and NI?

Thanks
K.

[Kosenurm]

Re: Tax on income outside PAYE

Just registered online to be safe. Will wait for the UTP to come through from HMRC and then speak to them...

Thanks for your help.

K.

[matt3942]

Re: Tax on income outside PAYE

Hi [MENTION=40489]Kosenurm[/MENTION] - the standard personal allowance for this financial year (06/04/2015-05/04/2016) is £10,600. You have to pay tax on everything you earn above that. For example, if you earned £15,000 per year from your normal employment, and £5,000 per year from other work, you would have to pay tax on £9,400.

IMO the best way to do this is to register for self-assessment. You will need to declare your earnings from your normal employment and the tax already paid in the relevant financial year. HMRC will then calculate the difference for you to pay.

- Matt

[Kosenurm]

Re: Tax on income outside PAYE

Hi @Kosenurm - the standard personal allowance for this financial year (06/04/2015-05/04/2016) is £10,600. You have to pay tax on everything you earn above that. For example, if you earned £15,000 per year from your normal employment, and £5,000 per year from other work, you would have to pay tax on £9,400.

IMO the best way to do this is to register for self-assessment. You will need to declare your earnings from your normal employment and the tax already paid in the relevant financial year. HMRC will then calculate the difference for you to pay.

- Matt

Thanks Matt. So, does this mean that I would no longer pay my main job's tax through PAYE and I would need to do this all myself?

Thanks
K.

[matt3942]

Re: Tax on income outside PAYE

Hi [MENTION=40489]Kosenurm[/MENTION]

No, your employer would continue to pay tax on your earnings with them through their PAYE system. When you complete the self-assessment you will have to declare your total earnings (from your employer and other work) and any tax you have already paid (i.e. tax your employer has deducted/paid for you). You can find this information on your P60.

HMRC will then work out the difference between the tax you've paid already (through your employer's PAYE) and what is left to pay.

I hope that helps.

- Matt

[Kosenurm]

Re: Tax on income outside PAYE

Hi @Kosenurm

No, your employer would continue to pay tax on your earnings with them through their PAYE system. When you complete the self-assessment you will have to declare your total earnings (from your employer and other work) and any tax you have already paid (i.e. tax your employer has deducted/paid for you). You can find this information on your P60.

HMRC will then work out the difference between the tax you've paid already (through your employer's PAYE) and what is left to pay.

I hope that helps.

- Matt

Ideal response. Thank you.