How to Declare a One-Off, Two Month Contract

[TechGuy87]

I have a relatively complicated situation, I'll do my best to explain things, but please ask if anything is unclear!

I recently left an employer (hereafter "A") and joined a new employer (hereafter "B"). Both jobs are full-time, permanent roles and are paid by PAYE.

"A" has recently got in touch to say that they urgently need my assistance. I have approached "B" and they are happy for me to take two days of unpaid leave per week for a period of six weeks, so that I can help "A" out. The work for "A" would be 100% remote, worked from home and would require no on-site visits.

The work for "A" would naturally be a contract, paid on day-rate. However, due to the length of the contract and the fact that it's not something I'm planning to do again, I'm unsure if it's worth setting up a company.

This leaves the umbrella option. Are umbrella companies set up to service people who have more than one job, or would they only be able to handle the invoicing if it was my only source of income? If an umbrella is the only option, can anyone recommend any companies that would be appropriate?

Any help would be appreciated!

[Alan @ BroomeAffinity]

Umbrella. The fact you worked with the "client" would almost certainly out you inside ir35 making a ltd not worthwhile. The length of time would also preclude limited co. Any decent umbrella co will be to cope with your situation. Contractorumbrella are highly recommended.

[SlipTheJab]

Can you not just do the work, get paid for it and then declare it on your SA return as extra income next year? Or failing that work as a sole trader.

[TheCyclingProgrammer]

I don't agree with Alan that the fact alone that you previously worked for A would put you inside IR35 - the contract and working practices would need to be reviewed like any other.

But I do agree that for a one off job like this there is no need to set up a Ltd company. It would be pointless.

Using an umbrella would avoid the IR35 issue entirely but so would engaging with your client directly as an individual if they are willing to contract you direct. I wouldn't even bother registering as self employed for a one off, just declare it on your self assessment under the "Other income" section and put it down as a one off freelance job in the notes/description. You can offset any allowable expenses too.

If you aren't registered for self assessment, then depending on the amount you may not even have to - I can't remember the limit but up to a certain amount you can declare the income to HMRC and have them adjust your tax code. Failing that you'll need to register.

[Fred Bloggs]

The tax and NI will be awful. Pay the money into your pension as a one off and claim tax relief on your SA.

[WordIsBond]

The tax and NI will be awful. Pay the money into your pension as a one off and claim tax relief on your SA.

Self employed people don't get NI relief on pension contributions. If OP ends up liable for NI, he's going to pay it (unless he sets up a limited company, which would be a waste).

As noted above, probably can just be reported as Other Income on self-assessment return.

[Snarf]

Go back to "a" do the work, get paid and declare it on a tax return... No need to go umbrella is there? Essentially your going to be self employed.

[LisaContractorUmbrella]

You can work with an umbrella company but you would actually be better off, as others have said, to work as a sole trader for the 6 weeks and declare the income through self-assessment at the end of the year. Just be aware that, as this is secondary income, you cannot apply any tax free allowance so all your earnings would be taxable at 20% (or 40% depending on your income level)

[SlipTheJab]

Or plan B, ...cash in hand

[VectraMan]

Or plan B, ...cash in hand

In a brown paper envelope?

I would just do the SA if that's possible. The umbrella is going to charge you their full fee despite you only doing 2 days a week.

The other thing is simply ask "A" to put you on their payroll.