2nd Income in addtion to Main Employment

[eagleeye118]

Wonder if anyone can help answer some questions for me? I'm currently employed full time also and currently pay tax at the higher rate (40%). I will in May 2014 be also working for another company part time in my spare time doing some consultancy work and will be earning an additional income.

I will be invoicing the second company on a monthly basis and can also charge VAT on top if applicable. I'm a little confused as to whether I need to process this as a sole trader or whether I should set up Limited company? Does anyone have any views/experiecne on benefits/drawback of either approach? This part time job is additonal income and as I already have a full time job I don't need the money on a monthly basis,

- Is it beneficial putting it straight into a pension?
- I won't need to pay myself anything as a monthly wage from the second job. Any benefit to me of a Ltd company?
- Anything else I can do to save on tax or any other benefits?

Thanks

[ASB]

You could set up ltd. Leave money in there and take it through er on wind up. Or take it as divis when you are basic rate taxpayer. But obviously there are the annual running costs to consider so it all depends on timeframes and amounts.

if it iw self employed it is just incomd and taxed accordingly. If comfortwble chucking it in a pension will gain relief of course su kect to overall contribution limits.

[eagleeye118]

Thanks for the reply.Would there be a benefit adding my wife as a shareholder. She also works but is a lower rate tax payer? If so how involved does she need to be with the company as I will be doing most of the work? Also, as I'll be invoicing the same company every month do I need to worry about IR35 at all? Thanks.

[eek]

Thanks for the reply.Would there be a benefit adding my wife as a shareholder. She also works but is a lower rate tax payer? If so how involved does she need to be with the company as I will be doing most of the work? Also, as I'll be invoicing the same company every month do I need to worry about IR35 at all? Thanks.

Ask your accountant?

[Craig at Nixon Williams]

IR35 should be considered if you decide to do the work through a limited company, and if you did it as a sole trader then you would need to consider if you are genuinely self-employed. Even if you put it straight into a pension you will still need to account for the money somehow as it is received – but your tax liability would be reduced as a result of doing this.

If the additional work is not worth a lot of money then you could consider using an umbrella company – you would be best speaking to an accountant about your specific circumstances before making a decision on how to do this.