Real life tax question

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numberjunky
numberjunky Registered Posts: 88 Regular contributor ⭐
in AAT Level 4 (Level 8 in Scotland)
Hi everyone,

I am currently self employed and have been for 20 years. I am just about to undertake a small P/T PAYE job in addition to my professional career. Can someone briefly explain the ins/outs of this real scenario?

I am completely out of touch with PAYE so any comments/advice would be appreciated.

I am a Level 3 student and just about to complete in June but have no idea about tax.

TIA

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  • Siany
    Siany Registered Posts: 6 New contributor 🐸
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    HMRC Courses

    Hi there

    The Inland Revenue do excellent courses with regards to PAYE and best of all they are free! Visit their website and look for workshop events.

    What do you do in your self employment?
  • numberjunky
    numberjunky Registered Posts: 88 Regular contributor ⭐
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    Professional entertainer - Keyboards, vocals and comedy

    Have got as far as Level 3 but I'm really fed up with the attitude of some of my potential employers. It is the same old cycle - no job without experience and no experience without a job. As a 'professional' person of 20 years and aged 44, I guess most are a little wary of me. Too old for a junior position and not enough experience for anything else.

    Gonna do a Diploma in Reflexology now and stay self employed.
  • cherub76
    cherub76 Registered Posts: 22 New contributor 🐸
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    I have only just started on my AAT journey, and some of the things I have read on here are very worrying!

    I have plenty of work experience, but no qualifications at all. I started work in my current company 5.5 years ago, working on a Tuesday morning just doing the wages.........I now work full time as accounts office manager and PA to the MD. Now im trying to gain the qualification I don't have time to think let alone study!

    Sometimes I think it is definately better to start at the ground and work up, at least that will give you a good grounding before emabarking on the courses...........but best of luck!!

    Cherub x
  • Barbara Knight
    Barbara Knight Registered Posts: 20 New contributor 🐸
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    PAYE and self employment

    HI
    I am not sure if I have read you correctly but as a self employed person who also does bit of employed work this is what usually happens.
    When you start work as an employed person, as you do not have a valid P45 from you last employer (or of you do it is too old to be counted) you have to fill out a P46. on this you will state that this job is not your only job on account of you having an income from self employment (statement c). You are then placed on the PAYE tax code BR which means that ALL of your emplyment income is taxed at the basic rate of 20% and you have no freepay allowance - this is because it is considered that your other job (self employment in this case) will be claiming the freepay allowance already.

    This will all work itself out at the end of the year when you submit your tax return as you must state your income from all sources; including self emplyment and your income (and tax deducted) from the employment. When the total income is worked out, the tax you have already paid from employment is deducted from the tax that you owe from employment + self employment - freepay allowance. You will only be liable to pay the balance of tax due.

    Hope that this makes sense
    Regards
    Barbara
  • Sarah Ripper
    Sarah Ripper Registered Posts: 1 New contributor 🐸
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    Barbara Knight wrote: »
    HI
    I am not sure if I have read you correctly but as a self employed person who also does bit of employed work this is what usually happens.
    When you start work as an employed person, as you do not have a valid P45 from you last employer (or of you do it is too old to be counted) you have to fill out a P46. on this you will state that this job is not your only job on account of you having an income from self employment (statement c). You are then placed on the PAYE tax code BR which means that ALL of your emplyment income is taxed at the basic rate of 20% and you have no freepay allowance - this is because it is considered that your other job (self employment in this case) will be claiming the freepay allowance already.

    This will all work itself out at the end of the year when you submit your tax return as you must state your income from all sources; including self emplyment and your income (and tax deducted) from the employment. When the total income is worked out, the tax you have already paid from employment is deducted from the tax that you owe from employment + self employment - freepay allowance. You will only be liable to pay the balance of tax due.

    Hope that this makes sense
    Regards
    Barbara


    Hi - I agree with Barbara, however, from working in practice i can add more -
    When you become employed, you can either a/ choose the option as above or b/ choose to have your personal allowance on your employment.

    We advise our clients based on their income from each type. If you pay tax already on your self-employment and will continue to do so now you have an additional job, then you need to tick box c on a P46 as Barbara mentioned, however, if you are not paying tax on your self employment, then you need to use the rest of your personal allowance in your employment. This will need to be worked out by HMRC.

    Which of the two jobs will be bringing in the most money? as this will affect which you need to apply your personal allowance too.

    Sarah

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