Both PAYE & Selfemployed

Thespoofer

Ok so here's my situation.
Working PAYE for a company, average industrial wage, full time.

I'm thinking of pricing small jobs for myself outside of this and taking them on as self employed, fully registered ( same industry ( construction )) in my spare time.

If I need to buy some equipment for my self employed side , say 10k to get me started, insurance 2k and so on, bringing the whole start up cost to 15k or so, and in year 1 did not make any money ( earnings 0 ) working for myself, can I write of these ' losses ' against my PAYE side of things ?

If my tax paid as PAYE was 3-4 k per year would it be possible to reduce this amount ?

Hope it makes sense.

Thanks

Alan Shore

Expenses like insurance, motor ect are deducted from sales to calculate profit.

Equipment qualifies for Capital Allownace at a rate of 12.50% per annum so €1,250 in your example.

If you have a loss then you can set that against your PAYE income but be careful not to use losses against 20% income when in future you may pay 40% on profits.

Thespoofer

Alan Shore wrote: »

Expenses like insurance, motor ect are deducted from sales to calculate profit.

Equipment qualifies for Capital Allownace at a rate of 12.50% per annum so €1,250 in your example.

If you have a loss then you can set that against your PAYE income but be careful not to use losses against 20% income when in future you may pay 40% on profits.

Thanks for that, I'm a bit unsure of the last bit, I don't fully understand it. Any chance of an example ?( layman here .

Alan Shore

If your PAYE income in 2015 is €34k and you have a loss of €5k then most of the loss will be set against income at 20%. Refund €1,000.

If your PAYE income in 2016 is €34k and you have a profit of €5k then that will be taxed at 40%, liability €2,000.

myshirt

I'd say aswell to be careful about the clients you are doing the work for. If you came upon these jobs via you doing work in your PAYE job or on the back of your PAYE job etc, your employer is due a cut of the money.

Google 'restraint of trade'.

In laymans language, you can't take the bread off your employers table, take jobs they would otherwise get, compete directly with them etc. So be careful and keep it clean. A good way to suss it out is the 'but for' test. Ask yourself, if I wasn't working for this employer, or on this job... would I have got this work I'm now planning on doing on the side?

If yes, employer should be in for a large cut of the fee.

Thespoofer

myshirt wrote: »

I'd say aswell to be careful about the clients you are doing the work for. If you came upon these jobs via you doing work in your PAYE job or on the back of your PAYE job etc, your employer is due a cut of the money.

Google 'restraint of trade'.

In laymans language, you can't take the bread off your employers table, take jobs they would otherwise get, compete directly with them etc. So be careful and keep it clean. A good way to suss it out is the 'but for' test. Ask yourself, if I wasn't working for this employer, or on this job... would I have got this work I'm now planning on doing on the side?

If yes, employer should be in for a large cut of the fee.

Funnily enough I used to think that about the company I'm working for, they would have issues etc but as we all over the years have built up our own contacts, outside of work, then any work carried out is fair game.
I know 100% they don't have any issues with it, my employer can only physically provide a certain amount of service and often refuses work due to being over stretched.

My idea is to slowly break away from my employer ( employee status ) over the next couple of years, call it a certain stage if life decision.
I was out on my own ( with a business partner ) in the past and can see the benefits of this. It will all have to be done in an 'overlap' period where I'm both employed and self.

What I'm trying to figure out is if I bring on a small amount of overheads for rent of business premises, maybe a small loan for equipment and son on, even if I can pay this with my employee income at the start and earn very little even nothing on the business side, can I use this to my advantage in regards to writing off tax on my employee side etc?

I think maybe booking an appointment with an accountant before I even consider might be a wise move.