Complete newbie - overwhelmed by the amount of information
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  1. #1

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    Question Complete newbie - overwhelmed by the amount of information

    Hi guys!

    I have a simple question here but it seems that I have to go through tonnes of legal material to get some sort of answer, only to find out that the legal documents are full of ambiguities.

    I am a fully employed IT professional, paying taxes via PAYEE and it's always been like that as I'm permanently employed.
    I'm thinking of freelancing on the side, basically working weekends etc to doing small jobs here and there and of course I do want to do that legally (i.e. pay taxes) but I am unsure how to go ahead.
    Should I register as a company? I am not sure if the IR35 thingy affects me, I just want the least tax demanding method, hopefully without much hassle.

    Any ideas? Anyone in a similar situation?
    Looking forward to your response!!

    Nick
    Last edited by nkomp18; 12th April 2012 at 00:12.

  2. #2

    Some things in Moderation

    cojak - scorchio!

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    Go for an Umbrella, simple and hassle free, particularly about the IR35 thingy.

    Which is what you want, isn't it?

  3. #3

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    northernladuk is a fount of knowledge

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    There was a Freelancer UK site which sounded more up your street but I don't think it is very active if it even exists at all?

    Either way, What Cojak Says....
    'CUK forum personality of 2011' - Winner - Yes really!!!!

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    Quote Originally Posted by cojak View Post
    Go for an Umbrella, simple and hassle free, particularly about the IR35 thingy.

    Which is what you want, isn't it?
    Thank you for the advice but from what I read "Traditionally, Umbrella Companies were more expensive than running your own Limited Company, mainly because their charges included all the administration overheads, and they tended not to offer the same tax advantages."

    So what I ideally want is the least tax demanding method. The reason is, I am fully employed and I don't even know whether I'll bother to do any freelance work so my profits might be zero.
    If I do any work it might just be a few hundred quid a year profit (like..500 quid). So I don't want to pay contributions everymonth or whatever else for something that I'm not planning to make any use of.

    Does anyone know how much it costs to register as a self employed or to set up a limited company? Is there a zero cost to doing any of these?

    Nick

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    Quote Originally Posted by nkomp18 View Post
    Thank you for the advice but from what I read "Traditionally, Umbrella Companies were more expensive than running your own Limited Company, mainly because their charges included all the administration overheads, and they tended not to offer the same tax advantages."

    So what I ideally want is the least tax demanding method. The reason is, I am fully employed and I don't even know whether I'll bother to do any freelance work so my profits might be zero.
    If I do any work it might just be a few hundred quid a year profit (like..500 quid). So I don't want to pay contributions everymonth or whatever else for something that I'm not planning to make any use of.

    Does anyone know how much it costs to register as a self employed or to set up a limited company? Is there a zero cost to doing any of these?

    Nick
    Well, you have to pay Corp Tax and possibly pay an Accountant to do the End Of Year Accounts. Depending on who you go with, you may not have much to take home after all the fees and tax that has to be paid if you were to go via Ltd. For the amount you are looking to bring in, you may as well declare the income as Self-Employed work and ask HMRC if you can do a Self Assessment in order to pay for Income Tax. Also speak to the NI department and inform them of your projected income. This would probably be your best bet.
    If your company is the best place to work in, for a mere 500 p/d, you can advertise here.

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    Quote Originally Posted by nkomp18 View Post
    Thank you for the advice but from what I read "Traditionally, Umbrella Companies were more expensive than running your own Limited Company, mainly because their charges included all the administration overheads, and they tended not to offer the same tax advantages."

    So what I ideally want is the least tax demanding method. The reason is, I am fully employed and I don't even know whether I'll bother to do any freelance work so my profits might be zero.
    If I do any work it might just be a few hundred quid a year profit (like..500 quid). So I don't want to pay contributions everymonth or whatever else for something that I'm not planning to make any use of.

    Does anyone know how much it costs to register as a self employed or to set up a limited company? Is there a zero cost to doing any of these?

    Nick
    I would also suggest starting with an umbrella until you are more familiar with ltd company set up and workings and associated accounting required.

    Ltd co set up can cost as little as 60 - if need be engaged an accountant as soon as, if you haven't already.

    Also there is plenty of expertise on this site so if in doubt post and ask, although do read up on as much as you can as posting respondees can be quite harsh at times if you haven't, just to forewarn.

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    Quote Originally Posted by kaiser78 View Post
    Also there is plenty of expertise on this site so if in doubt post and ask, although do read up on as much as you can as posting respondees can be quite harsh at times if you haven't, just to forewarn.
    I've been reading through so many sites and material and I really feel none of it applies to me. Most of them are for ambitious entrepreneurs or proper business set ups and freelancers that want to have a sizeable profit from all of this.

    I already have a full time job and a good annual salary and this is something that I want to do more like a hobby. But it does involve a small profilt (probably a lot under 5k annually if any profit at all) so I want that little profit to be legal and pay taxes on it. For the next three months, just to give you an idea, I don't expect more than 400 quid profit.

    I really don't feel that I've come across a similar scenario yet.

    The advice I've been getting so far has been extremely varied as well and that makes things harder.

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    Quote Originally Posted by nkomp18 View Post
    I've been reading through so many sites and material and I really feel none of it applies to me. Most of them are for ambitious entrepreneurs or proper business set ups and freelancers that want to have a sizeable profit from all of this.

    I already have a full time job and a good annual salary and this is something that I want to do more like a hobby. But it does involve a small profilt (probably a lot under 5k annually if any profit at all) so I want that little profit to be legal and pay taxes on it. For the next three months, just to give you an idea, I don't expect more than 400 quid profit.

    I really don't feel that I've come across a similar scenario yet.

    The advice I've been getting so far has been extremely varied as well and that makes things harder.
    Well, my advice is to declare the income on a Self-Employed basis and inform HMRC that you plan to bring in an income of less than 5k, so you may not have to pay any Class 1 or 2 NIC and all you have to do is pay either 20%, 40% or 45%/50% income tax, depending on your threshold. Setting up a Ltd Company for a small amount is pointless, as you may need to pay Accountancy fees either on a monthly or yearly basis (End of Year Accounts may need to be audited by an approved Accountant). Going via an Umbrella may work, as you only pay a fee based on the income you bring in as well as paying Income Tax and National Insurance Contributions.

    Something you will need to take into consideration. You may need to gain your employers permission in order to carry out a 2nd job, as it may be deemed as a conflict of interest.
    If your company is the best place to work in, for a mere 500 p/d, you can advertise here.

  9. #9

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    Quote Originally Posted by northernladuk View Post
    There was a Freelancer UK site which sounded more up your street but I don't think it is very active if it even exists at all?

    Either way, What Cojak Says....
    Freelance UK :: Everything for the creative freelancer

  10. #10

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    silly question..
    If you sell a car and make a bit of profit, like 300 or something, just as a one off, are you Supposed to declare that?

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