Self employed earnings whilst also working full time?

[think about it]

I’ve just been offered and agreed to take on some consultancy work by a local consortium. I’m currently working full-time in the NHS and this work, whilst linked, will be done in my own time (evenings / weekends).

I’m wondering about the best way to separate and deal with the additional income which could be perhaps an additional £10k per year.

I’ve looked, albeit very briefly, into creating a sole-trader company so that I can have a separate bank account and entity from my otherwise full-time PAYE income.

So, what’s the best way to ensure I don’t get myself into a mire with the HMRC?

[martin2006]

Inform HMRC that you will be working as self employed as a 2nd job and you will generate the receipt of a tax return to report your earnings etc.

 

You should inform HMRC within 3 months of beginning the S/E work

 

You don't necessarily need to create a company but if you want to keep it totally separate from your current job there's no harm in a separate bank account, doesn't have to be a business account either, if you do set up a company then you will need a separate business account.

[think about it]

Thanks Martin, I'll look into the company option a little deeper and give the HMRC a shout.

[BazzaS]

I’ve just been offered and agreed to take on some consultancy work by a local consortium. I’m currently working full-time in the NHS and this work, whilst linked, will be done in my own time (evenings / weekends).

 

I’m wondering about the best way to separate and deal with the additional income which could be perhaps an additional £10k per year.

 

I’ve looked, albeit very briefly, into creating a sole-trader company so that I can have a separate bank account and entity from my otherwise full-time PAYE income.

 

So, what’s the best way to ensure I don’t get myself into a mire with the HMRC?

 

Addding to Martin's advice :

Set up 2 company accounts. One current, one "savings"

Put aside into the savings account the tax due each time you take money out of the company to spend

(If you decide to go down the limited company route, set up 2 savings accounts to put aside the tax, one for the company (corp. tax), and one for your personal [income tax] liability.

If a sole trader, you and the company aren't "separate legal personalities", so just the one "savings for tax payable" account will work for both you and the company).

 

If you have paid your (and the company's tax, if a Ltd company) : you may find there is money left over from the balance (not the current balance, but the balance 'at the relevant date'), due to claiming allowances ... then you can then allocate that money : consider it a bonus!.

 

Sure, this is a cautious approach and you'll have 'less available to spend' as you earn it due to the money you put aside, but you'll not come to a point where you need to pay tax, and find you haven't got the money to settle the tax bill(s)!.