PAYE worker taking on addional self employed work

baguio

Work full time job. Considering taking on addional work which would be contracted on a self employed basis. This extra work is ok without paying the tax but i'm afraid that after tax it will be simply not worthwhile.

Anyone been in this situation. How can I determine how much tax I would pay (there are few if any expenses incurred in this additional work that could be claimed against tax).

Eoin

baguio wrote: »

Work full time job. Considering taking on addional work which would be contracted on a self employed basis. This extra work is ok without paying the tax but i'm afraid that after tax it will be simply not worthwhile.

Anyone been in this situation. How can I determine how much tax I would pay (there are few if any expenses incurred in this additional work that could be claimed against tax).

I presume the normal tax bands apply, and you pay that rate on your profits?

I guess the trick is to see what can be expensed to minimise your tax liability. I know you said that there are few expenses, but would things like your mobile phone bill, mileage etc not be deductable?

thedini

how would it not be worthwhile? if ur current employers offered u a pay increase would u refuse it because of the tax implications. however if ur saying it maybe not worthwhile because of costs ie paying for a tax advisor to do ur tax return etc then dont bother ie if costs and effort exceed reward

Eoin

thedini wrote: »

how would it not be worthwhile? if ur current employers offered u a pay increase would u refuse it because of the tax implications. however if ur saying it maybe not worthwhile because of costs ie paying for a tax advisor to do ur tax return etc then dont bother ie if costs and effort exceed reward

If your employer offered you a 10% increase, but you had to work 20% more hours to get it, then it may not be worth your while.

Clearly the OP will have to work extra hours for this new source of income, and that may not be worth his/her while if a lot of this will be taxed.

PS - no need for the txtspk!

nesf

baguio wrote: »

Anyone been in this situation. How can I determine how much tax I would pay (there are few if any expenses incurred in this additional work that could be claimed against tax).

If you're a sole trader (ie not forming a limited company for your additional work) then any income can essentially be added to your present income for calculating tax. If you're already in the 41% tax bracket I'm afraid that everything you earn on the side will have to be paid at this rate which can make things look less appealing. With expenses and similar you can cut this down a bit but you'll probably need a

thedini wrote:

how would it not be worthwhile? if ur current employers offered u a pay increase would u refuse it because of the tax implications. however if ur saying it maybe not worthwhile because of costs ie paying for a tax advisor to do ur tax return etc then dont bother ie if costs and effort exceed reward

If your current employer gives you a raise, you get more money for the same work essentially. If you're putting in extra work over and above the standard 40 hours, and paying 41% tax on it then it mightn't be worth it depending on how badly you need the money etc.

baguio

I'm going to leave it. The rate they pay doesnt justify it. Will have to come up with another plan.

I don't know why they de-incentivise working though. When I lived in Germany, they had a system whereby employees could take on part time work and be tax exempt on this work up to a certain amount. It was not a large amount - but fine for those that needed extra income (and a willingness to work) for whatever reason.