PAYE & Self Employed

[toby99]

Hi - If you have a full-time employed job and a self-employed job at the same time, how is the TAX and NI sorted out. Currently I am self-employed and submit by tax return and pay NI monthly. When I take on my other role my salary will be subject to PAYE. Does one become BR and do I pay two lots of NI? Thanks for your help

[Tom Braider]

Short answer is yes. Your employer will deduct tax at basic rate becaseu you'll have to assume that your personal allowances will be used up against your self-employed income. In self-employment you'll be paying Class 2 and (maybe) Class 4 NIC. That'll continue unless the self-employmet stops but in employment you'll be liable for Class 1 NIC. You have to pay both, but only if your're earning enough. Ask your tax office about small earnings exception if your self-employed income is low.

[msemma]

When I first started to get income from my self-employed work in addition to my PAYE job, I simply had to inform the tax office and began to complete tax returns at the end of the year and then got a bill for any outstanding tax. If your PAYE job brings in more income than you self-emplyed work then make that your primary job ie the one you pay Tax and NI on, so that you pay the right amount of tax and NI as you go along. If, at the end of the tax year it turns out that you have not paid enough tax (or too much!) or NI it is easier to sort out via your tax bill/refund. If you have not paid enough NI you can pay AVCs at a later date. Obviously if you think your SE income will be high then it is best to get some proper advice from the tax office over which is the best system for you.

I have to say that the people at my tax office have been really helpful to me over the years and as long as you are straight with them, they'll be straight with you, and as helpful as they can be!

Good luck with your new job!