How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • Go back-and-forth until satisfied
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 7052
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

I've recently launched my own startup business in the UK

This answer was rated:

Hello, I've recently launched my own startup business in the UK (VAT registered), and since I'm not yet generating any revenue, I'd like to consider the possibility to accept some few occasional consultancy works in SW development in a field totally different from my own startup business and I would like to keep it separate from that. Would it be possible? How I should operate for doing that in terms of invoicing, taxation, and other bureaucracy setup? In particular, in my case there are two clients, which are an Italian and a French company. Thank you for your help and guidance.
JA: Have you talked to a tax professional about this?
Customer: Not yet
JA: Anything else you want the Accountant to know before I connect you?
Customer: No..that's it in essence. Do you think there are anything else which makes sense to add in terms of info?

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

You should register for self employment, the procedure is here:

https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed

You can then run your consultancy within your self employment envelope. On registration HMRC will send you a self assessment return form for completion at the conclusion of each tax year [5 April]. If this business breaches the VAT Turnover Threshold you will have to register and operate UK VAT. Inter EU sales are standard rated supplies.

Customer: replied 6 days ago.
Thanks. If I do register myself for self employment, are there any implication with my startup business of any sort? Can these two things be done in parallel?
Customer: replied 6 days ago.
I prefer continue with the chat so that I will have useful notes written down. Thanks

Sorry, I am have mislead you. Is your start up business a limited company?

Customer: replied 6 days ago.
it is.
Customer: replied 6 days ago.
I'm one of the company director and shareholder

Right, panic over, no problem then. Remember any payments made to you as a director must be made through PAYE channels.

Customer: replied 6 days ago.
What this means practically speaking "payments made to you as a director must be made through PAYE channels"? Is there any way to keep the two things separated? I mean avoid to use my startup for these two external and occasional consultancy works but invoicing them as a consultant?

They are already separate as a limited company is a different legal entity from its directors and shareholders. What you propose will not work as your self employed income is taxable as Income Tax (IT) anyway.

Customer: replied 6 days ago.
practically speaking what I should do in terms of documentation, invoicing, taxation etc? What are the steps?

You invoice as normal, but in your personal capacity.

Customer: replied 6 days ago.
Can you show me an invoice example I should use in this case? Is VAT number required? and can I get the payment in my personal private bank account?

A VAT Number is ***** needed unless you are registered for VAT. As you are invoicing as self employed you can, but I would recommend running a separate business account.

Customer: replied 6 days ago.
I'm registered for VAT with my limited company. But since I should invoice as a self employed I do not need that. Am I understanding correctly? Can you show me an invoice example I should use in this case?

If you are not registered for VAT than any format will do.

Customer: replied 6 days ago.
Do you just have an example to share? I just want to be sure...
Customer: replied 6 days ago.
not sure the link is correct...It does not point to any specific example
Customer: replied 6 days ago.
It would like this one: https://create.onlineinvoices.com/gb/templates/UK-Invoice-Template-no-VAT with my name instead of the business name, right?

Correct!

Customer: replied 6 days ago.
Thanks. In terms of taxation what I should know?

Net profits from self employment will be exposed to Income Tax and National Insurance in the usual manner.

Customer: replied 6 days ago.
can you better explain what this means with an example? Apologies I'm not used to it at all...thanks

Unless you can tell me the amount involved, I cannot. In any event I am 6 hours ahead of BST here and will respond in the morning, sorry.

Customer: replied 6 days ago.
Ok thanks. The amount will be about £10,000
Customer: replied 6 days ago.
I will wait your feedback tomorrow morning. Thanks again

Income Tax (IT), Nil, 10K is below your Personal Allowance of 12.5K.

National Insurance (NI), GBP 164.

Please be so kind as to rate me before you leave the Just Answer site.

Customer: replied 6 days ago.
Does this means that for that amount I will not have to pay taxes and NO need to send documentation or communicate anything to HMRC?

As you will owe NI you will have to self assess.

Customer: replied 6 days ago.
Is the self asses something that can be done online by myself? Can you share any relevant link with instructions and guidelines for self assessment? Thanks again

Oh yes, here is the link:

https://www.gov.uk/log-in-file-self-assessment-tax-return

Delighted to have been of assistance. Please don't forget my rating.

Customer: replied 6 days ago.
I see I should register for self assessment and there are three options. In my case, which path I should take?
Register if you're self-employed
Register if you're not self-employed
Register if you're a partner or partnership

Self employed.

Customer: replied 6 days ago.
I will need to that within April of the year after the year in which I received the payment. Os that right?

No, you make the return for each year's net receipts for the tax year, 6 April to the following 5 April.

Customer: replied 6 days ago.
for instance if I get payed in December 2019, I will need to make my return via self assessment within 5 April 2020. The same if I get payed in March 2020. Correct?

Indeed.

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 6 days ago.
Thank you for your help! Have good day! I will rate you now

Delighted to have been of assistance.

Thank you for your support.