One-Off Contract

[Anatonic]

Hi all,

New here so sorry for the very basic question...

I'm currently in a full-time permanent job and I've been offered a one-off job to create some marketing materials for a limited company - all of which I've cleared with my current employer and they're fine with. I'm only doing this as it's through a good friend of the family and I have no intention to do any further 'freelance' work beyond this one-off - simply as I'm due to be posted abroad with my existing company within a month or two.

My question is how do I go about taking payment so it's all above board? They will pay by bank transfer from what I understand and I would supply an invoice, but it seems like a lot of effort to register as a sole trader and do a tax return only to then not require the sole trader status? Or have I got this wrong?

I don't mind registering if this is the only way to do so to be above board, but is there any way to declare the £600 I'm due to be paid without having to register? As I say, I don't intend to do any further - especially since I'll be on secondment with my full-time employer. I've always been wary of 'cash in hand' and would prefer to understand how to go about this legally.

Any advice would be gratefully received!

[SueEllen]

You need to get in touch with HMRC and register as self employed. Unfortunately there is no way round it.

Link - HM Revenue & Customs: First steps to register as self-employed

Link - HM Revenue & Customs: Self-employed tax and National Insurance

[Anatonic]

I thought that might be the case - it's not a problem, but once I've done the job, am I able to submit a self-assessment and then inform HMRC that I am no longer a sole trader? Especially as I'll be in Melbourne for the next 24 months.

Either that or I assume that I could remain a sole trader (to leave the door open for other jobs). Am I right in thinking that if I earn very little, that it's not going to be too difficult when it comes to working out tax? And equally my additional NI contributions could be re-imbursed if under a certain threshold?

I expect that I won't make any more than around £1500 in this financial year (11/12).

On the advice of another member on here - I'm going to speak to our Finance Director at my full time employer - who has said he'd be more than happy to run me through things. He's away for a couple of weeks, but I need to get stated on this job pretty soon and would like to be ahead of the game a little...

Is it also true I could do the job and invoice the guys so long as I register as a sole trader within a month of doing it?

[Hex]

I thought that might be the case - it's not a problem, but once I've done the job, am I able to submit a self-assessment and then inform HMRC that I am no longer a sole trader? Especially as I'll be in Melbourne for the next 24 months.

Either that or I assume that I could remain a sole trader (to leave the door open for other jobs). Am I right in thinking that if I earn very little, that it's not going to be too difficult when it comes to working out tax? And equally my additional NI contributions could be re-imbursed if under a certain threshold?

I expect that I won't make any more than around £1500 in this financial year (11/12).

On the advice of another member on here - I'm going to speak to our Finance Director at my full time employer - who has said he'd be more than happy to run me through things. He's away for a couple of weeks, but I need to get stated on this job pretty soon and would like to be ahead of the game a little...

Is it also true I could do the job and invoice the guys so long as I register as a sole trader within a month of doing it?

Depending on how much this if for and how frequently you are going to be paid, I think you could probably get away with just putting this on your SA return as Other Income and paying income tax on it. If it is a one off I am fairly certain this would be OK. Maybe one of the accountants can clarify?

[Taxless]

Sorry, I'm a little confused.

You initially say you will do a one-off job for around £600, then later say you won't make more than £1500 in this financial year.

If you are going to work in Australia for 24 months then you are likely to be non-UK resident for tax from when you leave the UK.

Are you suggesting that after the initial £600 you might have additional work to take the total up to around £1,500?

If so and if the additional sums are earned while you are non-resident, then the later sums might escape UK taxation.

I would recommend registering with HMRC sooner rather than later to avoid it being overlooked and then incurring a penalty.

The UK business would appear to cease when you go abroad and then you can always re-register when you come back, if needs be.

Once registered you can register to submit a tax return online and HMRC would do the tax calculation for you if you submit the form promptly.

If I am reading this correctly then you have a full years UK tax allowance (£7,475) available this year and you get 1/12th of that set against your salary each month. So, for example, if you left the UK at 30 June, you would only have used 3/12ths of that.

The other 9/12ths is still available to set against any UK self employed income this year, plus the salary earned to date, so you may even have overpaid tax up to the date you left the UK.

In summary, you can have £7,475 UK income this year without being due any UK tax.