PAYE and extra income?

galah

Hi all,

posting this for a friend of mine, who is a full-time PAYE employee. She has now been offered some part-time freelance work for a company in the EU (outside Ireland), projected income for 2011 between 5 and 10 k in addition to her normal job.

How would she go about paying tax on that freelance income? Is there a way to declare this outside the PAYE system? Would she have to set up as a sole trader and apply for a tax number, or just send an income tax return?

She'd prefer if her current employer wouldn't find out about extra work, obviously...

Any links or info greatly appreciated!


Cheers,
galah

farrentax

Hi,

Will your friend be exercising the foreign employment duties in Ireland? If yes they will be taxable on the Income in Ireland. As this is freelance work they should register as self-employed and complete an Income Tax Return. This means the tax on this income will not fal due to the 31st October 2012. However, it is advisable to register as self-employed now prior to the work commencing. As a self-employed individual they will be entitled to claim a deduction for some allowable expenses relating to the freelance work.

The individuals employer will not be aware that they are registered as self-employed.

If the foreign employment is excercised in another state they may need to declare that income in the other country also, but a credit will be given in Ireland for any tax suffered depening on the Double Taxation Agreement.

I hope this helps.

galah

Heya,

cheers for the reply, very helpful!

yes, the work will be carried out in Ireland. I get her to contact revenue then so - I assume setting up as self-employed won't have any sort of implications on the PAYE, benefits, tax credits, etc?

farrentax

Setting up as self-employed will not affect her PAYE atall, as she will pay Income Tax on the income on an annual basis. It will also not affect her tax credits, however if she is not wholly using her tax credits for her PAYE employment she can use some of her personal credit to shelter the self-employed Income. Same goes for her standard rate cut off point. This will all be done when completing her tax return.

In relation to benefits, if you mean social welfare benefits, she will now be paying a Class S stamp which on her self-employed Income, whilst this entitles her to less social welfare benefits, she as nothing to worry about as she is also paying Class A on her employment so she still has full entitlements. It will affect anything that she applies for that is means tested as her income has increased.

She can register as self-employed by completing the form TR1 http://www.revenue.ie/en/tax/it/forms/index.html. If she contacts Revenue this is all the will tell her, so handier to just print it off and send it in.

galah

Great stuff, thanks a million!