Advice on additional income


P

Pete Smith

Hi all.

I've got a question about additional income. I've done a google, and got a
hit on a question similar to this, but from a few years ago, and things
may have changed since then. It was on UK.finance, but I've asked again,
and they suggested uk.accountancy (and this is the closest match I can
find).

Basically, I'm employed full time. I'm not self employed, and don't have a
limited company etc etc.

I've got an opportunity to do a one-off freelance project, which pays a
lump sum when I'm finished.

I know I should declare it.

1) When I checked google, the consensus is that I'd not have to pay N.I.
on it, because I'm already employed, and it could just be tacked onto the
amount I earn normally, so I'd only pay 24% tax on it (the amount added to
my income wouldn't push me past the 40% boundary :-( ).

2) What's the best way of doing this, without having to fill in one of
those self assessment tax returns? Can I just write to my tax office and
say "This is my name, this is my N.I. number. I'd like to declare that I
earned an additional £n, in addition to my normal paid employment.

3) Could I ask the tax office to adjust my tax code for next year, rather
than requesting a very large chunk of it in cash form.

4) Is there any real, sensible way I can limit the tax payable on it? I've
not got any relatives I could have paid and then steal the money from ;-)
I'm not that bothered about this part, it's mainly the 1st 3 points I'm
interested in.

Thanks in advance (for the free financial advice :)

Pete.
 
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D

Dave

Hi all.

I've got a question about additional income. I've done a google, and got a
hit on a question similar to this, but from a few years ago, and things
may have changed since then. It was on UK.finance, but I've asked again,
and they suggested uk.accountancy (and this is the closest match I can
find).

Basically, I'm employed full time. I'm not self employed, and don't have a
limited company etc etc.

I've got an opportunity to do a one-off freelance project, which pays a
lump sum when I'm finished.

I know I should declare it.

1) When I checked google, the consensus is that I'd not have to pay N.I.
on it, because I'm already employed, and it could just be tacked onto the
amount I earn normally, so I'd only pay 24% tax on it (the amount added to
my income wouldn't push me past the 40% boundary :-( ).

2) What's the best way of doing this, without having to fill in one of
those self assessment tax returns? Can I just write to my tax office and
say "This is my name, this is my N.I. number. I'd like to declare that I
earned an additional £n, in addition to my normal paid employment.

3) Could I ask the tax office to adjust my tax code for next year, rather
than requesting a very large chunk of it in cash form.

4) Is there any real, sensible way I can limit the tax payable on it? I've
not got any relatives I could have paid and then steal the money from ;-)
I'm not that bothered about this part, it's mainly the 1st 3 points I'm
interested in.

Thanks in advance (for the free financial advice :)

Pete.
Remember that all expenses in relation to the extra income should be
deducted before calculating any tax due, including, for example, car /
travel to and from clients premises, telephone calls to them,
stationery, tools, use of home (bit of gas / electric / computer etc),
accountant - I'll have a pint please :)

Cheers,
Dave
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P

Pete Smith

capt80 said:
Hi all.

I've got a question about additional income. I've done a google, and got a
hit on a question similar to this, but from a few years ago, and things
may have changed since then. It was on UK.finance, but I've asked again,
and they suggested uk.accountancy (and this is the closest match I can
find).

Basically, I'm employed full time. I'm not self employed, and don't have a
limited company etc etc.

I've got an opportunity to do a one-off freelance project, which pays a
lump sum when I'm finished.
[snip]

Remember that all expenses in relation to the extra income should be
deducted before calculating any tax due, including, for example, car /
travel to and from clients premises, telephone calls to them,
stationery, tools, use of home (bit of gas / electric / computer etc),
accountant - I'll have a pint please :)
:)

I was self employed once (a few years ago now), so I've got the expenses
bit down OK.

I bit the bullet and phoned the tax office, and asked their opinion, and
basically I've got to become "self employed" again, but this time, because
I'm already on PAYE, I've got no NI contributions.

I suppose if I'm going to do it properly via a self assessment form, I'm
going to do it _properly_, and claim back what I can.

Fortunately, the liabilities are going to be less than 2k, so I can just
have it tacked onto next years (or is it the year after? I'll get a 2003-4
form, which has to be in by the end of 2004, so the alteration will be in
2005) tax code, rather than the Revenue requesting a large wad of cash.

Thanks for the info. Now I'll be doing this sort of stuff more, I may hang
round and pick up what advice I can :)

Pete.
 
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D

David Floyd

I bit the bullet and phoned the tax office, and asked their opinion, and
basically I've got to become "self employed" again, but this time, because
I'm already on PAYE, I've got no NI contributions.
Not necessarily so.

You will have Class 2 of £2 per week to pay if your self employed
earnings are above £4095 in 2003/04

You will have Class 4 at 8% on self employed earnings above £4615 in
2003/04

DF
P.S. You mentioned 24% tax in an earlier post in this thread - Basic
Rate is 22%.
 

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