Need to issue an invoice, not self employed

[Eric Mc]

sonic_2k_uk said:

Deva Link said:

AcidReflux said:

My wife is full-time employed by the NHS but does £400-worth of consultancy on the side each month on a self-employed basis for a single client.

If she does the work regularly and at the direction of the client then there's a danger that she could be determined to be an employee.

Is self employment subject to IR35?

No.

[bogwoppit]

dxg said:

bogwoppit said:

Just ring the tax office, register as self employed, tell them you won't be earning much and thus you shouldn't be paying NI and submit a self assessment tax return at the end of the year (which you may already be doing?). It won't take that long. Unfortunately if you want to be self employed, you have to act like you're self employed and pay tax.

Or, register with an umbrella company who will invoice your mate and pay you via their payroll, but depending on how they charge for their services it might not be worth doing. You'll pay tax and employees' NI too.

Or, just send him an invoice yourself and hope HMRC don't investigate you. The penalties will probably be less than your earnings but I've no idea how likely it is to happen and it's best not to get on the wrong side of the taxman I'd imagine.

Is this the way it works? I always thought that if didn't cross the threshold £4,250? then there is nothing to be done.

Unfortunately yes. You need to inform the revenue within 3 months that you are trading. The profit you make is irrelevant - if the purpose of the activity is to make money (as opposed to a hobby) then you must declare it. Failure to notify in time results in a fine of about £100 (if they find out of course). You won't actually pay any tax until after the end of the year, and your employee tax code for this year will stay the same. They may take the tax due out of your employed salary next year by altering your tax code, or they might send a bill instead. Normally you'd get regular bills for weekly NI but if you tell them when you notify them of trading that you'll earn below the threshold they shouldn't send any.

The above is what the tax office told me a few months ago.

So basically, if you do it all properly you will end up paying tax at your marginal rate, and no additional NI. If you don't do it properly and they find out you'll make an overall loss (tax + penalty).

[dxg]

bogwoppit said:

dxg said:

bogwoppit said:

Just ring the tax office, register as self employed, tell them you won't be earning much and thus you shouldn't be paying NI and submit a self assessment tax return at the end of the year (which you may already be doing?). It won't take that long. Unfortunately if you want to be self employed, you have to act like you're self employed and pay tax.

Or, register with an umbrella company who will invoice your mate and pay you via their payroll, but depending on how they charge for their services it might not be worth doing. You'll pay tax and employees' NI too.

Or, just send him an invoice yourself and hope HMRC don't investigate you. The penalties will probably be less than your earnings but I've no idea how likely it is to happen and it's best not to get on the wrong side of the taxman I'd imagine.

Is this the way it works? I always thought that if didn't cross the threshold £4,250? then there is nothing to be done.

Unfortunately yes. You need to inform the revenue within 3 months that you are trading. The profit you make is irrelevant - if the purpose of the activity is to make money (as opposed to a hobby) then you must declare it. Failure to notify in time results in a fine of about £100 (if they find out of course). You won't actually pay any tax until after the end of the year, and your employee tax code for this year will stay the same. They may take the tax due out of your employed salary next year by altering your tax code, or they might send a bill instead. Normally you'd get regular bills for weekly NI but if you tell them when you notify them of trading that you'll earn below the threshold they shouldn't send any.

The above is what the tax office told me a few months ago.

So basically, if you do it all properly you will end up paying tax at your marginal rate, and no additional NI. If you don't do it properly and they find out you'll make an overall loss (tax + penalty).

That's a bit of a bummer, but thanks for the advice.

Luckily I have the get-out clause of being able to charge it through my employer. Which means they'll sort out the tax for me, but take their slice in the process (which is somewhat ironic seeing as they did nothing to fund or otherwise facilitate the work (in fact, it was done while I was on holiday!)). Seems like the least hassle option, anyway...

[ymwoods]

Why not ask your mate to take £100 pound more as wages this month then take it out of his bank and give it to you as a "gift" for the odd few times you will be doing it? Saves all the farting around...

[anonymous-user]

In all honest I would not be too wound up on the tax, just make a self assesment at year end. I'd be more concerned on the PI issues of consultancy, that is what stops me doing casual work when I'm in employment, the PI insurance cover is normally more than the few hundred quid your mate wants. If its a real mate and they want a bit of advice I do it free, I will not sign anything, advice is on plane paper not signed, and they pay for dinner every now and then. If they want my signiture and qualifcations down on paper then they pay enought for me to take out the PI for a year.

[anonymous-user]

You could always <cough> sell him something other than your time, a PC monitor perhaps or a plank of wood!! if you've made no profit on this item there is no tax for you to pay, and he would have his invoice</cough>

[JM]

Bluequay said:

You could always <cough> sell him something other than your time, a PC monitor perhaps or a plank of wood!! if you've made no profit on this item there is no tax for you to pay, and he would have his invoice</cough>

Could he not pay you back 'in kind', a meal or two out, a weekend away. For you and the mrs not you and him, unless....


He could claim the meal etc back as entertainment/subsistance and you wouldn't need to worry about the tax etc. (maybe)

[dxg]

Berw said:

In all honest I would not be too wound up on the tax, just make a self assesment at year end. I'd be more concerned on the PI issues of consultancy, that is what stops me doing casual work when I'm in employment, the PI insurance cover is normally more than the few hundred quid your mate wants. If its a real mate and they want a bit of advice I do it free, I will not sign anything, advice is on plane paper not signed, and they pay for dinner every now and then. If they want my signiture and qualifcations down on paper then they pay enought for me to take out the PI for a year.

Luckily I'm covered by my client's PI for this job. In the past I have been forced to work through my main employer to have access to their PI.

But then, the contributions I make have limited consequence

PI for a year in my line of work would just not make jobs of this scale worthwhile. Plus, although I have a banner profession, I doubt any of its insurers would know what to make of the things I do. They're a bit "out there..."

Edited by dxg on Wednesday 4th August 17:40