Freelance Work and Taxation

Sinfonia

Hello all,

I am soon to be paid for some freelance composition work I did for an English company.
It's a once-off payment (unless there's anything else in the future, but nothing at the moment anyway).

I'm at a loss to figure out what the situation is with tax, and scouring revenue.ie, citizensinformation.ie and Google in general didn't enlighten me!

Can anyone help?

srsly78

You have exported services to the UK. This gets treated as income and you must declare it like any other self-employed income (see guides in sticky). This is assuming you are tax resident in Ireland ofc.

Also if you are VAT regd there is other stuff to deal with, but that is a seperate topic from income.

The link for self employed guide in the sticky seems to be broken tho, here is working one: http://www.revenue.ie/en/business/self-assessment.html

Sinfonia

Thanks for your reply.

So much of what I'm reading is going way over my head though

Do you know how this affects Tax Credits/Rate Bands etc.? I have a regular job and pay tax via PAYE; how is my tax liability for this freelance work assessed alongside that?

srsly78

If you can't understand this stuff yourself then you gotta pay an accountant to sort it out. Alternatively you could just ring up your tax office and ask them. As a self-employed person you have obligations to file returns.

Tax bands and credits apply to your total income, that includes your self employed income.

Sinfonia

srsly78 wrote: »

If you can't understand this stuff yourself then you gotta pay an accountant to sort it out. Alternatively you could just ring up your tax office and ask them. As a self-employed person you have obligations to file returns.

Tax bands and credits apply to your total income, that includes your self employed income.

Ok, thanks; I wasn't sure if (for example) the PAYE tax credit applied if you weren't strictly speaking being paid by a company of which you are a registered employee.

One more quick question if I may:
According to my calculations, if the total income from all work in a year (regular jobs + freelance etc.) is, say, €25000, the total deductions for the year seem to amount to €2528.00, i.e.:

[(25000*0.2) - 3540] + [(10036*0.02) + (5980*0.04) + (8984*0.07)] = 2528.08

Where 
25000 = Total annual income
 3540 = Total tax credit
10036 = USC rate band 1
 5980 = USC rate band 2
 8984 = Balance of USCable pay

Is this correct, or have I missed anything along the line?
Thanks a million for your help.

srsly78

See the section on USC here: http://www.revenue.ie/en/tax/it/leaflets/it10.htm

You would be paying 7% usc on the extra income it seems, so your calc is right. Note there are probably more tax credits you can avail of, for environmental waste charges etc.

How are you claiming paye credit if you are not "strictly speaking" being paid via paye?

Sinfonia

srsly78 wrote: »

How are you claiming paye credit if you are not "strictly speaking" being paid via paye?

I work for a shop in Dublin, and the tax there is taken from my income via PAYE.

The company in England will be paying me as a once-off freelancer, presumably either by cheque or bank transfer.

So then does the PAYE tax credit apply only to the income from the shop I work in, or does it apply to all income?

srsly78

You are both paye and self-employed in that case. And yes you still get the paye credit. Credits get applied against your tax total, just simple subtraction.

Sinfonia

Ok, grand stuff; seems I need to fill out Form 11 and so on anyway.
It's all much clearer now!

Thanks for being my guide, I really appreciate it. This is why I love boards

Mr. Incognito

Fill out a Form 12

ordinary_girl

I have pretty much the same question (figure there's no point in posting two threads?). I've just done some one-off freelance work for an English company, it's nothing substantial, it should come to less than 100 euro. What do I do about it tax wise? I should probably add that I work part time. A one-off freelance payment doesn't affect entitlements (social welfare, medical cards, etc) either does it?

edward2222

Freelancers should always work with an accountant.

Yes, a good accountant can be expensive.
But that investment can also save you money, time and headaches.

ordinary_girl

edward2222 wrote: »

Freelancers should always work with an accountant.

Yes, a good accountant can be expensive.
But that investment can also save you money, time and headaches.

True, but I figure because it's a once-off and it's not a hugely substantial amount of money I'd rather sort it myself, if I can.

edward2222

ordinary_girl wrote: »

True, but I figure because it's a once-off and it's not a hugely substantial amount of money I'd rather sort it myself, if I can.

Well, most freelancers are so busy that theyre too lazy to pay taxes, but if they can handle it by their selves then why not?

Axwell

edward2222 wrote: »

Well, most freelancers are so busy that theyre too lazy to pay taxes, but if they can handle it by their selves then why not?

Anything to back this up or just a dumb sweeping statement?

Ordinary Girl - your part time work is PAYE I assume? If so then you can pay it through payeanytime.ie

http://www.citizensinformation.ie/en/money_and_tax/tax/income_tax/how_to_comply_with_your_tax_obligations.html

If you go to the link above and read the section titled "Who is not a chargeable Person" it gives you the outline. '

edward2222

Axwell wrote: »

Anything to back this up or just a dumb sweeping statement?

Well, I used to be a freelancer before, I work while studying, and most of my classmates are also doing freelance, and honestly, we cant really pay our taxes, so what we do is we hire an accountant that will be in charge of our taxes

Axwell

That still means you pay your taxes. What you are trying to say it seems is that you are too busy/lazy to calculate what tax you owe and hire an accountant to work it out for you. Not that you are too busy/lazy and just dont pay them. Two very different things.

edward2222

Axwell wrote: »

Not that you are too busy/lazy and just dont pay them. Two very different things.

Ow, I didnt mean I dont pay taxes.

Wyldwood

Can I jump on the back of this thread and ask a related question please?

My daughter, who is in full time PAYE job, has been asked to do some freelance work. She presumed she could do this and declare it on a year-end return but the client has asked for a tax ref no. as they are applying for a grant. Should she just set up a sole trader company or can it still be done as a year end return?
It's beginning to sound more complicated than it's worth as the amount she'll earn won't be a lot.

rahmalec

Can't believe people are suggesting getting an accountant for the sake of 100 euro extra income. You will just lose money, should not even have bothered working.

OP and anyone else doing a small bit of freelance work.
- add up how much you're getting paid (in one year). This is your gross.
- add up how much you spent to earn this (materials, software, travel expenses, etc).
- take one away from the other to find your assessible income.

If your assessible income is less than 3174 you can add this to your paye income and file a form12. Google this and register to do it online.

If the income is greater you need to register as self employed (probably sole trader). You'd send in a form11 in that case and have to pay preliminary tax, etc. Involves some googling to find out what exactly to do but at the end of the day it's primary school math.

The tax reg number is just the pps no when becoming self employed.

Makeupartist

Hi. I work in full time employment mon-fri in southern ireland (minimum wage). But i want to start up a bit of freelance makeup on saturdays.. whether it be bridal makeups in northern & southern ireland,as i live near border, or going to local hairdressers and do a few makeups on clients to help get my name out there. At what point should i have to declare second income... as i wont be making bery much while i start out. Times like this i hate been an adult, just want to do my hobby and make a few extra euros while doing it.

Mrs OBumble

Makeupartist wrote: »

Hi. I work in full time employment mon-fri in southern ireland (minimum wage). But i want to start up a bit of freelance makeup on saturdays.. whether it be bridal makeups in northern & southern ireland,as i live near border, or going to local hairdressers and do a few makeups on clients to help get my name out there. At what point should i have to declare second income... as i wont be making bery much while i start out. Times like this i hate been an adult, just want to do my hobby and make a few extra euros while doing it.

You need to declare when you start getting any income.

You also need good records of your expenses, so you can calculate any profit.