Self Employed & PAYE questions & advice

[griffin dai]

Can anybody help with the following please gents?

If somebody's been registered self employed for the last 9 years or so and then gets offered a full time PAYE position is it possible to take the PAYE job but also stay self employed for the odd bit of work on days off through an agency or private job?

Also during the SE to PAYE transition is it down to the individual to contact HMRC or the new employer? Especially if wanted to also stay SE?

Also! self assesment/tax return. Do the books still get done up to April then submited on time & paid 31st Jan as if still self employed or would HMRC want the years tax paid asap as you've now gone PAYE? I don't think they do but not sure on this one?

Let's say the new PAYE job kicked in July would they want April - July's Self Assesment tax submited and paid straight away or paid 31st Jan 2017 like normal?

Ta Dai

[Eric Mc]

griffin dai said:

Can anybody help with the following please gents?

If somebody's been registered self employed for the last 9 years or so and then gets offered a full time PAYE position is it possible to take the PAYE job but also stay self employed for the odd bit of work on days off through an agency or private job?

Also during the SE to PAYE transition is it down to the individual to contact HMRC or the new employer? Especially if wanted to also stay SE?

Also! self assesment/tax return. Do the books still get done up to April then submited on time & paid 31st Jan as if still self employed or would HMRC want the years tax paid asap as you've now gone PAYE? I don't think they do but not sure on this one?

Let's say the new PAYE job kicked in July would they want April - July's Self Assesment tax submited and paid straight away or paid 31st Jan 2017 like normal?

Ta Dai

You have asked four distinct questions so I will try to deal with each in turn

1. From a tax point of view, you can retain a Self Employed/Trading Business alongside a full time employment position.
Of course, just because you also might be receiving some additional income from agencies or short term assignments does not necessarily mean that the income from those activities is genuinely self employment income. It could be part time employment - in which case those employers would need to operate PAYe on whatever they pay you.

2. It is a new employer's duty to notify HMRC that he has taken on a new employee. All you need to do is provide him with basic information about yourself - your name, address, NI number, tax references etc.
New employers coming from a previous employment normally pass on a P45 from the previous employer to the new employer. As you have not had a previous employment for a long time, you will not have a P45 to pass on.
Instead, your new employer should ask you to complete a Form P46 which is a statement by the employee stating that the new employment is their MAIN employment and therefore their personal tax allowances for the tax year should be allocated to this new employment.
The employer does not send the P46 to HMRC. They keep the form on their files. These days, the employer's notification of new employees is carried out through the new(ish) on-line Real Time Information (RTI) system.

3. If you continue to receive Self Employment income, then you will still need to submit self assessment tax returns. You just continue to prepare your self employed accounts in the normal way and then transfer the self employed data to the self employment pages of the tax return as you no doubt have always done.
The self assessment tax return is a return of ALL your income for a given tax year so the employment income also needs to be included on the return - even though HMRC will have details of this already from the submissions made by your employer.


4. Any tax due under Self Assessment is still payable by the normal; due dates. However, if the tax due under Self Assessment is relatively low, you MAY opt to have the liability collected through the PAYE system - although I am not a fan of this as it can make sorting out your PAYE quite complicated - especially when it comes to completing the following year's self assessment tax return.

One area you haven't mentioned is National Insurance. I presume up to now you have been paying the normal NI that self employed people are supposed to pay, Class 2 on a regular monthly or quarterly basis and Class 4 as part of your overall self assessment tax/NI bill.
Now that you will be also in employment, you will start paying Class 1 through deduction on your salary. Class 2 and Class 4 MAY still be due but if your taxable trading profits are below the Small Earnings Exception limit you can opt to cancel your Class 2 payments. The Class 4 liability will be automatically worked out as part of the Self Assessment process.

[griffin dai]

Excellent, thanks for taking the time to help here.

I forgot about the NI payments! Currently paying class 2 every month and class 4 with the yearly tax bill in Jan. Sounds good then, biggest concern was switching to PAYE but forfeiting any extra self employed work I can pick on my weeks off as I should have plenty of time now to do the odd bit extra here & there.....new shiny Quaife LSD's not going to pay for itself!!


Thanks again, Dai