I have a ” day job” currently which pays me well and as a result I’m in the higher tax bracket of 40%. My employer sorts everything out and I pick up my salary after they’ve sorted deductions for tax , NI, pension etc.

I’ve been offered some instructional work which is more of a second job / pocket money / for fun where i will be classed as self employed and as such invoice the company I’d be working for on a monthly basis for my services, The rate of pay as a whole isn’t too bad at £100 per day but I need to figure out if it worth my while once i make any deductions such as tax etc.

Would I be taxed at 40% as this in addition to my day job? Do I pay NI on this extra income too? Can I claim reasonable expenses ? I wouldn’t need any tools as such, I’d effectively been freelance instructing using someone else’s equipment but would need clothing and maybe some mileage.

Grateful for any advice .

Yes

Do I pay NI on this extra income too?

Yes

Can I claim reasonable expenses ? I wouldn’t need any tools as such, I’d effectively been freelance instructing using someone else’s equipment but would need clothing and maybe some mileage.

You can try.

You’ll have to complete a tax return each year and, after that, pay any tax due. The HMRC site has details of what cn and cannot be claimed.

Ltd and pay yourself a directors dividend

You’ll also have to likely file a tax return and maybe get an accountant to help out. I’d carefully consider whether you are going to to paid enough to make it worthwhile especially for the possible hassles

You might even have to charge/pay VAT if its a service you are offereing rather than working as an employee. Not sure its so easy to do this via a ltd company these days. Also you should check your current employervisnhappybwith a second job, I know contracts I’ve had over the years forbid it. Other STWers (accountants etc) here know more, hopefully they will be along in due course.

Thanks for the replies so far. Yes it has occurred to me ” is it worth it” what when I’ve paid various taxes and so on what I pickup . Appreciate I’m fortunate enough to be offered extra paid work for something I’d be doing for fun, but instructing someone else means I’m not out there doing myself so much, so pros and cons.

Ltd and pay yourself a directors dividend

The OP is already paying high rate tax, so no saving.

What the OP could do though is use a Ltd company and leave the money there for a ‘rainy’ day, but Accountant costs will probably use a good chunk of it up.

Without knowing your current earnings and the income from the second job it’s impossible to advise as to the best route. If you’re close to earning 100k already any extra could push you over, lose your tax allowance and the income after taxes from the other job may not be worth it.
Also from your description you should be an employee not self-employed unless you are working at various different companies and the person/company offering you work are doing so as your agent.

Self assessment and expect that £100 a day to turn into £50 a day take home. If you cross the £100k mark make that closer to £35 take home.

Is it really worth it?

On behalf of all those for whom an extra £50 a day pocket money would be like winning the lottery:

#firstworldproblem

Depends what you have to give up to fit that extra work in – ride time, family time, beer time, TV time….

Can they pay you in cash? I think that would be tax free.

What @nick says shows the brutal reality, the nature of the tax system is such that its probably not worth it unless more “casual” in nature OR you are investing in building a future business/lifestyle – eg establishing relationships and contacts which could turn into your main job / semi-retirement etc ?

OP @craig / br have posted knowledgeably on other threads.

If he’s classed as self employed and invoicing then he isn’t employed by the other company. HMRC “could” deem him as such depending on the number of hours/days he does but it’d need to be a fair bit.
As such he won’t be taxed by them unless what he is doing comes under the CIS scheme.
Yes you can claim mileage, uniform cleaning allowance (possibly), etc.
You WILL need to do a SA return at the end of the year and it will go towards your overall allowance at the higher rate although there are a lot of things you can claim against – HMRC website has a list.
VAT only comes in over £72k (might be more now) unless you choose to self-enroll to offset expense costs (fuel,equipment,etc) but generally not worth the hassle.

£100 a day is really not a lot for freelance work so almost certainly not ‘worth it’ financially – but then you said you were doing it for fun.

It’s always worth it financially. That’s the point of the way the tax system works. The post a few up above is the most helpful, is it worth it against the cost to you of losing that time to do other enjoyable things? You can’t buy time back, whatever money you have.

Ref tax etc. my accountant would advise you that it’s not worth going ltd unless you’re clearing £20k from this additional venture. The accounting costs etc don’t stack up otherwise.

VAT wise- you’ll only HAVE to register for VAT if you turnover £70k (ish) +. However, if you did go ltd the cost of this isn’t as much of an issue. If you’re not vat registered you just don’t charge vat on your invoice.

You can claim allowances for running your additional business. A good accountant can be worth every penny in advising you and submitting your books to make the most out of this. Expect an accountant doing a simple tax return to charge you approx £120 for the level of business you mention above. You could always do if yourself the second yr.

Also, if you don’t try it you’ll never know if it’s worth it! You can always stop if it doesn’t work out.

Ianaa

Thanks for the replies so far. I currently earn £45k per year. With the second job the pay rate would be £100 per day but then paying my own tax , NI etc. I couldn’t see me doing more than 2 days per month with the second job, but I have to drive my own car to the location ( various race tracks in the uk) . So it would be fun thrashing others cars about doing instruction etc but including the travel time each way and the ‘work’ when there it doesn’t come to much if you divide it by the hour ( it would be a 7 hour working day ) what you would pick up. Appreciate I’m fortunate enough to earn good money and anything else is a nice bonus for which I’d be grateful.

You might even have to charge/pay VAT

Not unless there are 820 days in a year.
And he works (in his second job) on every one of them 🙂

Surely you would need Professional Indemnity Insurance, if you were self-employed?

But as Craigxxl suggests, it sounds more like employment than self-employment. Would they agree to that? It would remove the HMRC hassles, and not affect the total tax. Also at £200pm, there’d be no NI deducted.

As others have said there are a number of issues to consider

1) as a sole trader tax gets calculated on your total earning from all sources (e.g employment, self employment, divedends, interest etc). So in your scenario £100 per daty becomes roughly £50 after tax. only you can decide whether that is worth it, but it sounds like you’ll be getting paid for something you enjoy anyway.

2) as a self employed person you will need at a minimum public liability insurance and possible professional indemnity insurance if the “training” you are giving could result in a claim for negligence

3) you will be able to set expenses against income on your self employed earnings. the difference (profit) is what you calculate the tax on.

4) you have three months to register with HMRC after you become self employed – you don’t need to do it straightaway or beforehand

5) you will need to complete a tax return if you are self employed.

there is plenty of free advice for setting up a business out there – the HMRC has some great resources on self assessment and record keeping and your local council may have a “business support” or business start up programme. In addition most areas of the UK now have a “growth hub” which offers telephone support to people setting up businesses.

Also at £200pm, there’d be no NI deducted.

That’s £200/month on top of £3750/month for his “day job”

So it would need NI deducting from it.

No NI is correct as self employed class 4 NI earnings threshold starts at £8060 and would qualify for small earnings exemption n class 2 NIC

Craigxxl is correct you will pay normal NI with your full time job but claim NI exeption for you part time job just a simple form and when i did it, it lasted 2 years.

Hadn’t heard of the Small Earning Exemption before.
Will be applying for that 🙂

Cheers!

I don’t think you need to apply for an Exemption any longer.
Class 2 NI will now be calculated along with Class 4 NI and Income Tax, as part of the self-assessment process.

As a higher rate taxpayer, is it really worth your while for 100 quid a day, 40% of which will be lost as tax anyway? I wouldn’t get out of bed for that, it’s barely above minimum wage (maybe even below if you have any of your own expenses).

I wouldn’t get out of bed for that.

🙄

Sounds like a fun second job to me.
Save up the extra earnings to get an Orange and bin the santacruz.

You will be off set travel as an expense. Would you be travelling to these venues anyway?

My main worry would be the tax return. A colleague once did some proof reading for a few quid. He then did a tax return every year for about 8 years when he was just PAYE.

Same with my wife. One year she had some income from a flat. She sold the flat but they kept asking for tax returns for another 5 years

I’d vote for a minor second job tax code. Say upto £1500 a year just pay a blank 25% and no tax return. If you are still earning your allowance fill in a tax return and want to claim it back

I wonder if it would increase revenue as people would be more likely to do extra or declare it