UK employee to self employed to mix??


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Hi everyone.

I need help with a situation that is a bit complex for me and I need what options are actually available.

I have been working as a regular employee in a permanent position for a company that laid me off mid-November 2016. After that, I registered as self-employed with the HMRC because I am trying to start an acting career, so I have some invoicing to do as an actor. Hoping, of course, that this will grow with time. Still, because I also need to sustain myself, I am looking for more steady jobs to take on on the side.

Now, I have two options about what may happen in the near future and I need to figure out what is the best way to do everything according to the law.

1. I get a new permanent job. In this case: should I simply provide the P45 to the new employer and in the meantime keep invoicing acting jobs as self-employed and at the end of the year work out the extra tax return for the actor work subtracting what has already been paid as per P60? Is being self-employed as an actor and being employed as *whatever* valid?

2. I get a contract role. In that case, should I just incorporate? So that I can invoice both normal work and actor work with the Ltd? Or should I just keep invoicing everything as self-employed, so that I have a more direct cash flow? Or should I more simply use an umbrella for the contract and self-employed for acting?

Am I getting all this wrong?

Thanks again for the advice!

Best,
Alessandro Valentini
 
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Becky

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1. I get a new permanent job. In this case: should I simply provide the P45 to the new employer and in the meantime keep invoicing acting jobs as self-employed and at the end of the year work out the extra tax return for the actor work subtracting what has already been paid as per P60? Is being self-employed as an actor and being employed as *whatever* valid?
Yes, this is all fine. Your employment will deduct PAYE/NICs from your pay, but any work you do on a self-employed basis (ie the acting work) will be paid gross, so you need to pay any income tax / NICs through self-assessment.

2. I get a contract role. In that case, should I just incorporate? So that I can invoice both normal work and actor work with the Ltd? Or should I just keep invoicing everything as self-employed, so that I have a more direct cash flow? Or should I more simply use an umbrella for the contract and self-employed for acting?
You need to be careful of this. It can be slightly more tax efficient to operate through a company. However. if HMRC believe that the nature of the engagement between you and the contractor (the person / company you are doing work for) to be more like an employment, then it may treat your company as a personal service company and you lose any tax advantage. Plus you have all the associated costs of running a company.

https://www.gov.uk/guidance/ir35-find-out-if-it-applies

If you are doing work for a variety of people, with short engagements, and on your own terms, then this is unlikely to be an issue though.
 
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So, in the FIRST case, I will add the gross income of the permanent role to the gross income of the acting work, detract the expenses, then with that number figure out how much is owned for each bracket, then subtract the PAYE that has already been paid by the employee to get how much income tax I still have to pay. Correct?

And then do the same thing for NIC?

In the SECOND case, if it's contract work as a consultant, it should be 3/6 months and then change. Is there a max amount of income that forces me to incorporate? (Wish I had that problem)
 
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Becky

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So, in the FIRST case, I will add the gross income of the permanent role to the gross income of the acting work, detract the expenses, then with that number figure out how much is owned for each bracket, then subtract the PAYE that has already been paid by the employee to get how much income tax I still have to pay. Correct?
There are separate pages in your tax return for employment and self-employment - put the relevant details in the relevant sections.

In the SECOND case, if it's contract work as a consultant, it should be 3/6 months and then change. Is there a max amount of income that forces me to incorporate? (Wish I had that problem)
There is no limit, and nothing that forces you to incorporate :)
 

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