Permie offered contract with the same company

[Proximo]

As yourself.

I see. Would the taxman then simply add the declared amounts to my PAYE income and work out the tax?

[TheCyclingProgrammer]

You don't necessarily need to register as self-employed for a one-off piece of work; IMO you could just declare it under "additional income" on your self-assessment and pay tax accordingly. Personally I don't think doing a one-off freelance job would constitute as "trading" and therefore make registering as self-employed necessary. Obviously if it became an ongoing thing then this could change things.

If you're not already registered for self-assessment, then you might be able to get HMRC to collect the tax through your tax code up to a certain limit (it's not a very high limit though - £2500 I think).

I certainly wouldn't go to the effort of setting up a Ltd co. and if your employer is not willing to engage you directly, and/or you aren't already registered for self-assessment and the amount is too much to have the tax collected through your tax code and you want to avoid that faff, then by far the simplest solution is to use an umbrella.

[TheCyclingProgrammer]

I see. Would the taxman then simply add the declared amounts to my PAYE income and work out the tax?

Yes. It will be taxed at your marginal rate.

As I said above, you might not necessarily need to register as self-employed for a single one-off job. IMO you shouldn't have to but you might want to check with HMRC and get their opinion. Registering as self-employed for a single job would mean having to register for self-assessment if you weren't already and paying additional NIC (unless your earnings are below the small earnings exemption limit, but you still need to apply for the exemption).

If you go through an umbrella, as it will be your second job you'll probably be put on the payroll with a BR tax code which will mean you get taxed at basic rate - this could result in you underpaying tax if you're a higher rate payer though which you'll still owe at the end of the year.

[mudskipper]

I think HMRC could well wonder why the employer is paying him off the books.

Go down the overtime route - safest and simplest.

[Contreras]

I think HMRC could well wonder why the employer is paying him off the books.

Go down the overtime route - safest and simplest.

HMRC will definitely want that 13.8% Employer contribution, from your Employer. It sounds fraudulent to me doing work off payroll when you are employed already.

Agreed. Ltd/umbrella would also avoid the NICs due to the amount being below the thresholds.

The employer is being naive to contemplate this as it is their responsibilty to operate PAYE.

[Taita]

Agreed. Ltd/umbrella would also avoid the NICs due to the amount being below the thresholds.

The employer is being naive to contemplate this as it is their responsibilty to operate PAYE.

Quite! The alternative arrangements you are contemplating are fraught with potential for misunderstanding and likely to trigger an HMRC investigation for your employer/yourself. The result may not cost either of you anything more than wasted time and anxiety but still hardly worth the effort.

Do the overtime and keep it neat and tidy. By all means try for a different rate of pay for the additional work but best to keep the whole thing within the current PAYE arrangement.

[Proximo]

Thank you all for the help, I feel like I have avoided a trap.

In the end I went overtime with 2x my hourly rate which is not too bad.

[Taita]

Thank you all for the help, I feel like I have avoided a trap.

In the end I went overtime with 2x my hourly rate which is not too bad.

Excellent result!