Some things

[alohura]

• The nice lady in Admissions at Kings College has come back to me at last. They are determined that the best course I could do in prep for appying for a place on the nutrition course next year is the Birkbeck Life Sciences foundation course. A staggering £1200, compared to my slimline version with the OU at £600ish. Damn. Will apply for 'financial

Comments

[purplegril]

You don't need a company to do it above board, all you need to do is fill in a tax return putting in your money in and any expenses (travel, cleaning equipment if any). Not complicated.

A Ltd company could save you money on tax in theory, but I suspect the admin, though not massive, would be not worth it for the amont you're making from cleaning. This is assuming you're making a smallish amount of money, which I could be wrong about.

[voofy]

yeah we're only making small amounts here - we're both working full time as well as this

could you explain more about tax forms?
how can we find out in advance how much tax they'll charge us? Because if it was a lot it would quickly cease being worth doing the work.

[purplegril]

You would probably pay tax at 20%. Tax rates are as follows. This will be on the total of your income, so your full time pay will be taxed via PAYE at these rates and your self-employed income will sit on top of that. I hope that makes sense. These are 'bands' so it's not a flat rate of tax based on the amount you earn, but you pay that percentage of that on your earnings between those amounts, so everyone gets the tax-free amount, everyone then pays 20% on the next chunk, then everyone pays 40% on the next chunk etc

[djpsyche]

But if your total tax and Class 4 NI are below £1,000, you won't need to make payments on account -- just pay any tax you owe by 31 January of the following year.

[djpsyche]

If you're already working full-time (I assume you're at the 20% rate) then you'll pay PAYE at the 20% rate. You'll also pay both Class 2 and Class 4 NI, however if you are making less than £5,000 in profits you can apply for an exemption from Class 2 NI (which is only £2.40 a week anyway) and if you make under £5,715 you won't pay any class 4 NI, which is 8% on profits over £5,715.

Corporation tax on the other hand is 21% for small companies. So if you are making under £5,715 per year, you'll come out ahead being self-employed.

Bottom line, go legit, take a 20% pay cut, but escape any penalties you will incur if they catch you which will be a lot more - up to 100% of the tax you owe.

[voofy]

so, is the short version of this that we'd need make 20% less, and have to do a bit of extra paperwork. But we'd be free from the worry of getting caught?

[squibbet]

Something like that. I think you may need to look at personal insurance as well though, but I wouldn't swear to that.

[djpsyche]

Yup, that's about right!
Also don't forget that you pay taxes on your profits, not on your takings. You deduct your job-related expenses to get to the figure you pay taxes on, and you can deduct things like your mobile phone expenses and use of your home as an office (if you do that), so in other words, you won't pay a full 20% of your takings. I can help you with that sort of thing if you're interested :)

[alohura]

so how likely do we think it is (and I realise how understanding my lovely tax professional friends are being here) that we would be caught?

[djpsyche]

I really haven't a clue on that one, even off the record. Sorry...