Setting up as a company/consultant

[Puddy_Tat]

There is a trading allowance of £1000 for self employment where you don’t have to declare it so you might be ok.

is that new?

i did the self assessment thing when i did self employed (that was about 10 years ago now) - and i wanted to register as self employed as the NI contributions cost less than the voluntary / not employed ones. (the latter probably won't be an issue here if OP has a regular job as well)

 

[Looby]

It might, because of emergency tax, as she can’t state on onboarding that her PAYE job is her sole employment.

This is basically a payroll problem though and we’ve done a candyman candyman candyman on Urban’s payroll geek.

And emergency tax comes out in the wash eventually, it just takes a while.

She wouldn’t be emergency taxed if she does this role as a self employed person. It’s not employment so wouldn’t be taxed at source.

She would be taxed at 20% for a second employed role (so a zero hours contract in this case) unless she split her allowances. Again, a faff for 15 hours.

Not sure I’d bother for 15 hours though and would tell them to sort it out if they want me.

 

[Silas Loom]

I thought that the trading allowance only applied when someone didn’t have other income but I was wrong.

So as long as it’s less than £1,000 - and your new employer isn’t the same entity as your current employer, like a MAT or whatever - then you just keep the money and don’t have to tell HMRC anything, and sign the onboarding forms that say your new job is absolutely your only one since the last one.

 

[Silas Loom]

She wouldn’t be emergency taxed if she does this role as a self employed person. It’s not employment so wouldn’t be taxed at source.

She would be taxed at 20% for a second employed role (so a zero hours contract in this case) unless she split her allowances. Again, a faff for 15 hours.

Not sure I’d bother for 15 hours though and would tell them to sort it out if they want me.

Emergency tax can get applied to the main job if you register as self employed and then start a PAYE job with the appropriate declarations. I believe.

Anyway, all of this is irrelevant as trading allowance applies (assuming that the new employer isn’t in some way the same entity as her previous employer, or that her spouse works for the previous employer).

 

[A380]

I've had my last paycheck.

I am tempted to give it to them free, on the proviso that they find someone else to do the work next year!

The hourly rate including doing the self assessment will be appalling. Can you ask for gift vouchers or similar that will go through their books and not cause you hassle.

 

[nottsgirl]

is that new?

i did the self assessment thing when i did self employed (that was about 10 years ago now) - and i wanted to register as self employed as the NI contributions cost less than the voluntary / not employed ones. (the latter probably won't be an issue here if OP has a regular job as well)

Yes, it’s new. I’m not sure about all the details so nagapie would have to look into it.

 

[nagapie]

The hourly rate including doing the self assessment will be appalling. Can you ask for gift vouchers or similar that will go through their books and not cause you hassle.

I wonder, I would accept that.

 

[Thora]

Can you just invoice them?
When I left a previous job I came back and did odd days for them and just invoiced. Then put it through my next tax return (it was over £1000 though).

 

[Elpenor]

Not really my area, as this isn’t really a payroll situation. Though it could perhaps impact your tax code.

So it sounds like the former employer wants to treat you as a supplier rather than pay via payroll. There are lots of reasons - outlined above - as to why they would want to do this and they probably didn’t offer the option of being paid via payroll because they don’t want the hassle.

I believe the £1k sole trader limit mentioned by nottsgirl is designed for people who sell via eBay or perhaps rent a field or a garage to someone, it covers property and trading. So it makes sense to keep your income from this income below £1000 for simplicity and you can theoretically avoid having to do a tax return (but keep an eye out for any HMRC correspondence just in case).

I’ve not used it myself and it’s hard to know what the application process is like without actually doing one, but I would assume you only need your NI number and maybe government gateway details?

This is the HMRC side of things

Tax-free allowances on property and trading income

Find out about annual tax-free allowances for property or trading income and if you qualify.

www.gov.uk

There are some references to 2018-2019 tax year in that link; I think they can be ignored as while I don’t think the gov.uk guide has been updated since then, I believe the allowance remains.

I don’t know if you receive any benefits, or maintenance, so not sure what the impact this extra income may have on these. It also occurred to me that student finance applications might be affected. These aren’t my area of expertise, but I know they are things that my employees need to bear in mind.

Not sure if Leafster could add more details on the sole trader side?

 

[nagapie]

Not really my area, as this isn’t really a payroll situation. Though it could perhaps impact your tax code.

So it sounds like the former employer wants to treat you as a supplier rather than pay via payroll. There are lots of reasons - outlined above - as to why they would want to do this and they probably didn’t offer the option of being paid via payroll because they don’t want the hassle.

I believe the £1k sole trader limit mentioned by nottsgirl is designed for people who sell via eBay or perhaps rent a field or a garage to someone, it covers property and trading. So it makes sense to keep your income from this income below £1000 for simplicity and you can theoretically avoid having to do a tax return (but keep an eye out for any HMRC correspondence just in case).

I’ve not used it myself and it’s hard to know what the application process is like without actually doing one, but I would assume you only need your NI number and maybe government gateway details?

This is the HMRC side of things

Tax-free allowances on property and trading income

Find out about annual tax-free allowances for property or trading income and if you qualify.

www.gov.uk

There are some references to 2018-2019 tax year in that link; I think they can be ignored as while I don’t think the gov.uk guide has been updated since then, I believe the allowance remains.

I don’t know if you receive any benefits, or maintenance, so not sure what the impact this extra income may have on these. It also occurred to me that student finance applications might be affected. These aren’t my area of expertise, but I know they are things that my employees need to bear in mind.

Not sure if Leafster could add more details on the sole trader side?

Thanks for this.
It didn't occur to me to ask someone in payroll but my kids' dad is a payroll manager so I'll see if he can explain this. He also pays me maintenance but I doubt that these will affect things as I don't claim any benefits.
I'm pretty sure I can keep it under £1000 so that's been good info to get from you and others.

 

[nagapie]

Can you just invoice them?
When I left a previous job I came back and did odd days for them and just invoiced. Then put it through my next tax return (it was over £1000 though).

I think I can if I sign up as a sole trader but that's new to me, I don't usually do tax returns.

 

[Thora]

I think I can if I sign up as a sole trader but that's new to me, I don't usually do tax returns.

You just register for self assessment online - you don't have to actually do the tax return until the January after the end of the tax year. It's very simple to do, even I can do it If you just keep track of what's coming in, any expenses and put some money aside for tax.

 

[nagapie]

You just register for self assessment online - you don't have to actually do the tax return until the January after the end of the tax year. It's very simple to do, even I can do it If you just keep track of what's coming in, any expenses and put some money aside for tax.

I think I will do this, although it does seem barely worth it for a few hundred quid.

 

[Thora]

I think I will do this, although it does seem barely worth it for a few hundred quid.

If it's under £1000 you won't have to do the tax return, just invoice them and keep track of how much you're paid.