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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 16234
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I already have a full time job earning 50000 pounds a year,

Customer Question

I already have a full time job earning 50000 pounds a year, now I would like to do some contracting job alongside my permanent job. I will be earning around 10,000 pounds per year from my contracting. I’m new to contracting, I need to find out which is best, ***** ***** sole trader or ltd company, And how to do invoicing and book keeping ???
JA: Have you talked to a tax professional about this?
Customer: no
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: no
Submitted: 5 days ago.
Category: Tax
Expert:  Virtual-mod replied 5 days ago.
Hello,

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Expert:  Sam replied 5 days ago.

Hi, Sam here , one of the UK tax Experts here on Just Answer, thank you for your question and I shall reply shortly

Expert:  Sam replied 5 days ago.

Hi

Much is dependant on whether you will live on this money which will be liable to higher rate tax regardless of whether a sole trader or not or whether you plan to leave this money and draw on it at a later date ?

If you will live on this money then a sole trader is the way to go as being a limited company you will pay 19% corporation tax plus income tax at 40% and dividend rates at 32.5% plus you would need an accountant as so many filing and admin requirements which costs thousand pounds

You have a companies house and corporation tax return each year plus your own self assessment tax return and then monthly payroll and consideration for expenses and benefits plus getting your accounts certified

As a sole trader you are taxed income less expenses (so you just keep a spreadsheet or accounts book or a simple accounting software programme recording all the money you earn and record all the expenses you pay out) and just declare this plus your employment on a year end self assessment tax return

Thanks

Sam

Customer: replied 5 days ago.
Thank you Sam, I already pay tax and national insurance on my full time employment. So If I go as sole trader, am I right I only pay tax on income minus expenses. At the end of the year, when I do self assessment, do I still need to declare my permanent job?Do I need to open another bank account for this or just use my current account??
Expert:  Sam replied 5 days ago.

Hi

You pay tax AND national Insurance on your self employment (and on the income from a limited company if you go down that route) only those who pay higher rate national insurance on employment don't need to pay self employment national insurance (or those under 16 or older than state pension age) or under the self employed threshold of £6515 for Class 2 and £9568 for Class 4

Then its £3.05 a week class 2 and then 9% in excess of £9568 for Class 4

Yes you declare your self employment in the tax return as well as your permanent job (or as well as salary if you take the self employment forward as a limited company)

If you are sole trader you can use your own personal account though i do recommend a separate account (just a normal one you use just for the self employment if you will have lots of income or outgoing transactions) but as a limited company you have to have a bank account in the limited company name

Thanks

Sam