Starting up

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olmotors
olmotors Registered Posts: 14 New contributor 🐸
in General accounting discussion
hi,

I am thinking of starting up my own business in my spare time as I am in full time employment at the moment. The thing is I dont want my employer to know. Does any one know if HMRC will inform my current employer due to NIC status changes etc? Also does any one have any usefull tips for going alone?

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  • slackda
    slackda Registered Posts: 460 Dedicated contributor 🦉
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    I shouldn't see an issue with the HMRC changin your status, as you full time employement will be subject to the normal status, however depending on how you are paying your self in your second business it may affect your tax status, but this isn't any of your employers business (i.e if you do want to keep them in the dark, they aren't told why your status has changed and i doubt very mucht that they are allowed to enquire into why). any one else's thoughts on this would be appriceated

    I also would advise checking you company policy and contract for details of other work as it could be a breach on contract and the last thing you want is to lose your job over some extra cash, i know when i spoke to my last employer, i had to fill out some forms (that was their policy) but they were fine with it.
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    Agree with Slackda.

    HMRC will not tell your employer anything and your self employment will usually not affect your tax code. There are no NIC status changes.

    Assuming you're using up your personal allowance in your day job (likely) you will pay 20% tax on all self employed profits up to higher rate and then 40% above that. You will pay Class 2 NI of £2.40 a week (irrespective of the fact you pay Class 1 through your job unless you are eligible for and apply for a small earnings exception) and Class 4 NI on profits about £5715 per annum.

    I would definitely check your employment contract though - especially if you are wanting to be s/emp in the same industry, many employers will include a non-compete clause. Some of these are unenforceable (or so I keep being told) but it's definitely woth checking out.

    Assuming there is no non-compete clause then there's no reason for your employer to ever know, if you so wish.
  • Psyche
    Psyche Registered Posts: 187 Dedicated contributor 🦉
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    One thing is that if you are full-time employed you can apply for a small earnings exemption from paying the Class 2 NICs. Your employer's already paying NI on your behalf so why should you pay twice?

    Also if you're just starting, you're unlikely to have profits straightaway so your tax code won't be affected until the following tax year at the earliest.

    I'm doing this too -- good luck!
  • olmotors
    olmotors Registered Posts: 14 New contributor 🐸
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    thanks for all the advice guys. I'm now going to check my contract!!

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