Tax Evasion

[Funkstar]

Saracen can probably answer this better, but I would go and get some profesional advice about this s soon as possible. £3000 a year is significant enough that could get you into a lot of trouble and be costly if you don't.

As for using your employers software to do work for someone else, especially if they are in he smae line of business, could be cause for disiplinary action if you were found out.

And as it's your employers software are you also using your employers computer? Again that might not go down well.

[JPreston]

Oh, just saw your edit. Yes apply for the Small Earnings Exception but note that this is exception from class 2 NICs only, saving you just the £2 or whatever it is a week.

If this was your only source of income you might choose to keep you class 2 NICs continuous anyway. But you will be paying them on your main job, so may as well go for the exception.

After two years, you'll have saved enough for a new mid-range graphics card...

[mroz]

Yes you have to be taxed on that - ~£2500 of untaxed income is the maximum amount that HMRC will consider not requiring a return for.

Then wouldn't it make more sense for the OP to reduce his/her income to below that level, rather than pay 23% on £3000?

[JPreston]

Then wouldn't it make more sense for the OP to reduce his/her income to below that level, rather than pay 23% on £3000?

No....you still have a tax liability on everything, but HMRC generally in practice would not require a return from someone receiving such a low amount from untaxed sources because of the admin overhead and low amount of recovered tax. They could just amend the OP's tax code to so that the tax due (is more or less) taken from his main employment through PAYE. But this would be entirely at HMRC's discretion.

Best thing I reckon, is sole trader route....just call the tax office and tell them what the situation is, there will be a NI affect through the year and a tax bill at the end of the year along with the return.

[mroz]

No....you still have a tax liability on everything, but HMRC generally in practice would not require a return from someone receiving such a low amount from untaxed sources because of the admin overhead and low amount of recovered tax. They could just amend the OP's tax code to so that the tax due (is more or less) taken from his main employment through PAYE. But this would be entirely at HMRC's discretion.

Ah, okay, understood - apart from the 'discretion'... If they don't amend the tax code, how do they get their tax?

[JPreston]

They can just ask for a tax return regardless of little tax is expected

[poindextermatic]

Well, I managed to get some advise from a Chartered Accountant, he said....

''Either the individual is an employee and should be paid via PAYE or they are self-employed and should be paid gross. If they are self-employed they will need to notify HMRC and complete a self-assessment return in order to pay the tax.

If it is small scale casual earnings then they may be able to advise HMRC of the amount and get it collected by reducing their tax code.''

So self assessment form by the sound of it...