Taking on a contract while working as a Permie

[mudskipper]

Why not just stick it as extra income on the SATR?

[TheCyclingProgrammer]

Why not just stick it as extra income on the SATR?

Could do but it's borderline whether or not it constitutes trading or is just "additional income" and therefore requires registering as self employed. HMRC guidance is a bit vague on what you can get away with as extra income without it being self employed.

If it was a one off I would certainly agree with just sticking it in the additional income box.

[Martin at NixonWilliams]

TCP is correct. The other income section of the tax return is for irregular, 'one off' type work. If you include regular income in this box it will be seen as a way of avoiding NI.

[TheCyclingProgrammer]

TCP is correct. The other income section of the tax return is for irregular, 'one off' type work. If you include regular income in this box it will be seen as a way of avoiding NI.

Out of curiosity, would HMRC be likely to challenge this if the amount was below the small earnings exemption threshold do you think?

I realise that strictly speaking the exemption isn't automatic and has to be applied for but pragmatically it would seem strange for HMRC to see it as avoidance if the exemption would have applied anyway.

I would have thought that if the amounts were low and below the threshold that HMRC would be unlikely to challenge it because you're at least reporting it and paying tax on it which is ultimately the most important thing right? Maybe I'm giving HMRC too much credit.

I also wonder if the planned changes to the way NIC is collected, avoiding the need for a SEE, would have any impact on this.

[Martin at NixonWilliams]

I don't think they would ever question an amount below the LEL to be honest. I have never seen the other income box on a tax return questioned by HMRC, although we do not have many clients that have 'other income'.

[TheCyclingProgrammer]

I don't think they would ever question an amount below the LEL to be honest. I have never seen the other income box on a tax return questioned by HMRC, although we do not have many clients that have 'other income'.

Thanks - I only ask as my wife has a small amount of income (< £1k/year) for some irregular work she does online and after discussing with my accountant we felt it wasn't worth registering as self-employed for. Prior to her needing to do a tax return we didn't bother reporting it as she had no other income and it was obviously within the personal allowance; now she does complete a tax return I just put it in the "additional" income box for her. Never thought it would be an issue.

I suppose a lot of people probably wouldn't even bother declaring the income anyway.