Tax what should you declare

[andy jackson]

Well here goes, First off I have googled but the relevant topics didn't seem to come up with what I wanted although no doubt it will be out there somewhere.

 

I am employed on a full time basis with a realtively large company they deal with my Tax N.I. etc so I have never really had to deal with it, and any jobs I did cassie were paid in cash, which I know I should probably have told the tax man about but didnt get round to it. Now however in my weekends and TOIL days off im earning a bit too much to hide and im sure I should probably be paying tax on it, not that I want to!

 

The only advice I have had so far was to open several bank accounts and spread the funds around but even I can see that this is both un ethical and that is my employer tells Adam Heart-Davis I have earnt x amount then he will come visiting my with a tax bill regardless of where the money is.

 

Have I got the right or wrong end of the stick?

 

Any help / guidance would be greatly appreciated and before anyone links to it I have alrealy read the inland revenue site!

 

Cheers Andy

[gareth]

When you're doing work outside your full-time employment, you're working as a freelance contractor. Those of us who make 100% of our living from freelancing have to go 'by the book' and pay all the proper tax and N.I. on what we earn - why shouldn't "part-time freelancers" who just do the odd 'foreigner' at the weekends and during their time off have to do the same thing? I don't mean to sound angry and bitter about this, but it's something that I feel quite strongly about.

 

My advice to you would be to speak to a good accountant - they'll be able to make sure that you pay the necessary taxes and NI payments, and also that you maximise what outgoings you can offset against your income for tax purposes. It's a minefield, and a decent accountant will save you far more each year than it costs to have them do your accounts.

[Guest lightnix]

..speak to a good accountant...

Exactly the advice that I was going to give, before the 'phone rang and Mr. Hughes beat me to it. You never know: they may be able to identify items purchased for use in your full time job, which can be offset agains tax.

[bassman]

You should also probably inform the Inland Revenue that you are doing self-employed work as they won't send you a tax return otherwise.

 

The opening multiple bank accounts advice is a bit scary and might almost be seen as money laundering by the tax authorities. Definitely make sure everything is done on the straight and narrow, the Inland Revenue, Customs & Excise etc have a nasty habit of being able to find out about dodgy dealings and the fines they can impose onto individuals are scary too!

 

My accountant is great and saves me many times what I pay him in fees!

[unis]

A tax return isn't very hard to fill in. The form deals with employed earnings and self employed earnings in seperate sections and the tax you have paid in employed work is factored in to the tax you owe for the self employed.

One thing that is important is keeping records, both of what you earn and what you spend on work specific things. If your self employed turn over is low enough you only have to fill in about half a page on the tax return about it.

telling the Tax office you are doing some self empoyed work is not to hard, phone them up or pop into your ocal tax office if you live near one. IIRC there is a form to fill in.

I've had no problems with the tax ofice and every one I've spoken to on the phone or inperson has been very helpfull, they even go through the tax return with you if you ask them to to check you got all the right bits filled in. I'l be using THAT service again next year as my return will be even more complicated with Maternity allowance, self employed earnings and employed earnings.

unis

[paulears]

The revenue should send everbody a tax return - if you don't get one, you should ask - why not?

 

Totally agree with the accountant advice - ALWAYS worth it.

 

A word of warning.

 

Spreading your money around won't help you one jot!

 

Everytime you open an account nowadays the banks, building societies and post offices report your name and address to the revenue. They are all very hot on customers who may be money laundering, and as they suffer from criminal activity, they spill the beans. Anybody who appears to have money in a lot of accounts, shifting around gets noticed by their fraud departments.

 

The revenue KNOW what money is in your accounts, and it's made worse by any interest you accrue. Eventually, they'll contact you and believe me innocent till proven guilty does NOT apply. The fines are huge, and the worst thing is you will be under the spotlight for years.

 

The other thing is that the places that may well pay you in cash have to account for the money too - so they may provide your name and address to the revenue when they do their accounts to justify where the money has gone. So you may well find the revenue know about your activities already - but have you on the list of waiting to be done when the bigger fish dry up.

 

My wife works for a Building Society, my sister is a senior tax inspector - so that's where the facts come from.

 

 

Everything is being tightened up. My accountant is having real problems with a company I work for who for some odd reason accept that people are self employed and don't deduct tax once they have the correct reference number - BUT insist on taking NI. As an employee, I would not be able to claim my travelling expenses, but as a freelancer, I can - so paying an employee NI payment for me might mean I can't claim my freelance expenses - my accountant is having problems - God knows what I'd do on my own. The revenue appear to understand actor/performer practice, but are having difficulty working out my status with this one particular company.

 

 

I never, ever, take cash - it simply isn't worth the risk nowadays - my accountant manages to make my tax liability lower than when I used to be PAYE'd.

[andy jackson]

You never know: they may be able to identify items purchased for use in your full time job, which can be offset agains tax.

 

Such as Tooling and safety clothing/ gear?

 

I was going to investigate an accountant and see what they say. I suppose I should take this up with my employer but if I was paying an accountant to account for bits of freelance I do would it be worth my while to ask work if they can employme as freelance and I deal with my own tax and NI?

How much are we looking at for an accountant, I can imagine their prices vary and that they

know how much your worth and will charge accordingly!

 

Thanks for the answers so far

 

Andy

 

 

Quotes fixed

[paulears]

There isn't usually a problem with being freelance and paye at the same time. I did this for a long time before taking the plunge and dumping the full time job.

 

I dealt with a tax office in one town for my freelance assessment, and another office dealt with the PAYE.

 

If you keep good records then you'll find the charges for accountants not that bad. The gerat thing is that they will normally promise to save you far more than you pay them - and your accountants fee is also a legitimate business expense! They know all the things claimable and in my first year I actually got a tax refund at the end. It doesn't have to be complicated. I keep all income and expenditure on a spreadsheet, keep all the receipts and invoices, batch them up and deliver them to him. He then usually calls me in to discuss queries then he works out what is claimable and what is not - he then draws up a basic profit and loss account. If you don't turn over too much and still remain PAYE'd thats about it. When you get a bit bigger, then you need a balance sheet. I've not bothered going limited as the extra set up and extra accountants fees don't make it a good idea at the moment - but this is the accountants advice, and it make sense to take it. I'm a bit worried about VAT as I'm getting close, and that again means more paperwork, and more fees.

[Nick Evans]

For me the greatest advantage of an accountant is that he speaks tax man, so I don't have to.

 

Here is a question. Without naming names (because that would be a bit like advertising) how much do people pay for their accountants? I have been freelance for many years, not VAT registered and I do a certain amount of preparation of the receipts etc before the accountant sees them (i.e. they do not receive a carrier bag full of scrunched up bits of paper and crisp packets). I pay £600 a year, which I have always thought to be a little high but the guy came recommended and I believe him when he says I am better off with him than if I were to do my own returns (but he would say that, wouldn't he?).

 

What does everyone else pay?

[themadhippy]

put 25% of what you earn into an isa or other high intrest easy acsess acount ,come the tax bill use the cash youve stashed to pay it off,

[Nick Evans]

What the TMH describes does work, I used to have a mechanism in my bank account which did it automatically. However, it is not the most efficient use of your money because it is tied up and could be doing something else. You do usually get a tidy little sum left over though, for spending on sweeties etc.

[paulears]

Mr Hippys idea is a pretty good one now - isa's are good things - the annoying thing is that the interest you pay, like everything else is extra income!

 

My fees for last year were £550 if that's any help.

[Rob_Beech]

my opinions follow the majority here. Cash jobs are a PITA and nothing else. Sure it means you have instant access to the money but I'd sooner it come in by cheque or other method on the night or after the job. I don't do work where I wouldn't trust them to pay or anything like that. so everything is kept above board.

 

I agree with the isa idea to a point but again I agree with the fact it is tied up where it could be doing something else.

I think above all (its been said). work out a system that's right for you. You may not get things the way you want it the first couple of years but its about developing a system.

Again things can be claimed against tax. somethings you would expect to claim back you can't really get away with. but other things you can. Along with the purchasing of equipment directly related to your full time employment, necessary timed servicing and calibration can be put down as an expense.

 

OOI whats the current threshold before the VAT man starts to call Its not as if I am quite up to those levels but I may be dealing with a new company soon who probably will be.

 

 

Rob

[w/robe]

I was going to investigate an accountant and see what they say. I suppose I should take this up with my employer but if I was paying an accountant to account for bits of freelance I do would it be worth my while to ask work if they can employme as freelance and I deal with my own tax and NI?

 

 

You could try this at work but the answer will probably be no as the rules over being employed or freelance are quite tight these days.

 

I've had both full time work and freelance jobs for years, just send all the details (including wife, kids, dependents, everything) to your accountant and let him sort it out.

 

 

When you first get in touch with an accountant you should say:

 

'I'm thinking of doing some freelance work'

 

NOT

 

'I've been freelancing for years but not paid any tax'

 

as they should inform the inland revenue if that is the case.

[paulears]

VAT - £58,000 taxable turnover - although you can voluntarily register below this. It depend on the percentage of your work that is for VAT registered people. Much of my business is with non-vat people.