Sole Trader and PAYE employee at the same time

fredo1664

Hello.

My wife is a PAYE employee. Recently, she started working as a sole trader as a "side" business. She doesn't expect to make much money out of the side business so most of her income will be from her PAYE employer.

We registered her for Income Tax in the MyAccount website, and now she has an access to the ROS website.

What is not very clear for me is, if she will have less than 5000€ taxable income from the side business, and make a normal living out of her day to day job, can she fill her taxes on the MyAccount website or does she have to do that on ROS now, via Form 11?

I guess we should talk to an accountant about all this but since her income from the side business will be low and straightforward, we thought we could manage the taxes ourselves...

If one of you guys could give us an opinion!

Thanks

hold my beer

Yes she now needs to complete a Form 11, via ROS. It can be done online and should prepopulate with PAYE earnings.

fredo1664

Thank you @hold my beer, for this clear answer!

GoProGaming

Sorry to jump in on this but i am in the same situation myself and free advice is hard to come by. If I register as a sole trader and earn nothing is that alright? Would i have to pay prelim tax etc? I want to register so I have the option of casual work on the side but may not take it up.

Saudades

I'm also a PAYE worker earning less than €5,000 from side income and trying to wrap my head around the tax situation myself. I started in 2020 so I have to file a return before October 31 2021 which I will do using (I think) Form 12.

This is from Citizens Information;

If you have a PAYE source of income and your net assessable non-PAYE income is less than €5,000, and this income is coded against PAYE tax credits or fully taxed at source, you are not regarded as a chargeable person (provided your gross non-PAYE income before expenses does not exceed €30,000).

However you must inform Revenue of this income. You can do this using PAYE Online Services, by contacting your local Revenue office, or by filing a Form 12, or Form 12S (a simplified version for routine tax returns - see 'How to apply' below). You do not have to pay PRSI on this income.

Presumably this means that if I earned say €4999 in side income in 2020 and I owe €1000 in tax, instead of paying a lump sum on my tax returns (which I will file in October 2021), I can 'code' this against my 2022 PAYE Employee Tax credit to reduce that credit from €1650 to €650. Not sure if I can also 'code' my USC liability against this Tax Credit but I don't see why not.

As for the PRSI, the last line of that Citizens Information quote surprised me;

You do not have to pay PRSI on this income.

So if I'm understanding that correctly, a PAYE worker earning less than €5000 a year in side income doesn't have to pay PRSI on the side income. That seemed too good to be true but a handy saving of up to €200 if correct.

relax carry on

There's a fair bit of over complicating the issue going on here. Unless you have been registered for self assessment Income Tax by Revenue, you can declare your non PAYE income via your Revenue MyAccount at the end of every tax year so long as your nett non PAYE income is under €5,000. Preliminary tax etc doesn't come into it.

kala85

https://www.boards.ie/discussion/comment/117690913#Comment_117690913

Can you write off expenses against this income if you file in form 11 rather than in ROS

relax carry on

https://www.boards.ie/discussion/comment/117696300#Comment_117696300

ROS is the system used to file form 11s electronically. Revenue MyAccount is the system used to file the electronic version of a form 12. If you have incurred expenses which are incurred wholly, exclusively and necessarily in generating that income you can of course offset those expenses. What return you file has no impact on that. The form 12 via MyAccount is easier than the form 11 via ROS so long as your nett non PAYE income is under €5k.

fredo1664

https://www.boards.ie/discussion/comment/117690913#Comment_117690913

We did register her on her MyAccount for Income Tax, which triggered the creation of her ROS account. Is this what "Unless you have been registered for self assessment" means? I'm just wondering. Last year she wasn't a sole trader, she registered this year, and we don't think she'll make more than 5000€. So this year she would file form 11 and not pay preliminary tax. But next year if she makes more than 5000€, she would then pay preliminary tax and file form 12. Is that it?

relax carry on

The best thing for you to do is chat to an accountant as you are getting a bit muddled. There was no need to register her for Income tax and a ROS account for the tax year 2021 as her non PAYE income is going to be under €5000. As you've already done it don't bother undoing it. The form 12 option is closed to you now due to the Income Tax registration.

fredo1664

Thanks @relax carry on, we'll go with form 12 then. You're very right, I should talk to an accountant.