PAYE worker and a Sole Trader

HydroTendonMan

Hi folks.

I am a PAYE worker and I have been making some extra money in the evenings and on weekends through a service I am providing. It started out very small (literally a few quid from non-related jobs), but now it is looking likely that I will be able to create a modest but steady income stream from this side business, so I plan to register as a sole trader.

I am aware that if I make less than 5K from this side business that I can simply declare this at the end of the year as a single figure, and the taxable element will be deducted from my tax credits. If I make more than 5K, I believe I have to fill out a Form 11. I plan on getting an accountant to assist with this should I make more than 5K and have to fill one out.

My questions is this: will the additional tax owing from my second income be taken from my PAYE employment through reduction of tax credits or do I keep the tax aside and pay it directly? As I said, I will be seeing an accountant as this progresses, but I was hoping to get an idea here first so I am not entirely clueless going in.

Bobby1984

The option is yours. You can leave your tax credits and SRCOP unchanged and you will pay tax on your additional income when you fike a return. Otherwise, if you know you will have €10k from 2nd income, you could allocate some SRCOP and tax credits to it which will mean that your net income from your main employment will reduce each month/week.

If you earn over €36,800 in 2022 from your PAYE income, you can assume that roughly 50% of the taxable income you generate from the side business will have to be paid as income tax and declared in the Form11. That might be easier to budget for than moving your tax credits around.

Keep preliminary tax in mind too, often catches people out the first time they file a Form11.