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Where Taxpayers and Advisers Meet

Current job changing from PAYE to Self Employed, New job PAYE

johngruer
Posts:10
Joined:Mon Jul 19, 2010 2:25 pm
Current job changing from PAYE to Self Employed, New job PAYE

Postby johngruer » Wed Sep 19, 2018 11:39 am

Hi all,

My current job willl stop on 15th October, and new job begins same day.

The current job will switch from PAYE to Self Employed (as I will continue to do work for them), and the new job will be PAYE.

What is the best way to manage this from a tax perspective? On the starter declaration form I am told that the new job will be BR tax, which is high?

Any advice greatfully received.

Thanks

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Current job changing from PAYE to Self Employed, New job PAYE

Postby SteLacca » Thu Sep 20, 2018 10:15 am

There are myriad questions, the last one of which is yours. On what basis is your job changing from PAYE to self-employed, whilst apparently not changing at all?

Status is not a matter of choice, it's a matter of fact.

johngruer
Posts:10
Joined:Mon Jul 19, 2010 2:25 pm

Re: Current job changing from PAYE to Self Employed, New job PAYE

Postby johngruer » Thu Sep 20, 2018 10:26 am

There are myriad questions, the last one of which is yours. On what basis is your job changing from PAYE to self-employed, whilst apparently not changing at all?

Status is not a matter of choice, it's a matter of fact.
Changing from full time to consultancy

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Current job changing from PAYE to Self Employed, New job PAYE

Postby robbob » Fri Sep 21, 2018 9:52 am

Ok i am presuming

You have simply swapped one employment job with another and separately started up as self employed at the same time - is that correct? i think thats what you were indicating but am not 100% sure.

If this is the case then
As far as the new employment job is concerned you simply hand over your p45 and your tax code and YTD pay amounts will continue on a cumulative basis.
On the new starter form you should indicate that this is now your only job but you have had another job this tax year - the fact you are starting up in self employment has no relevance -it doesn't count as a job as far as that questions is concerned.

You should expect when you complete your tax return you will owe tax at your marginal rate based on the sole trader profit + self employed ni as appropriate.

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Current job changing from PAYE to Self Employed, New job PAYE

Postby SteLacca » Thu Sep 27, 2018 2:58 pm

There are myriad questions, the last one of which is yours. On what basis is your job changing from PAYE to self-employed, whilst apparently not changing at all?

Status is not a matter of choice, it's a matter of fact.
Changing from full time to consultancy
I'm honestly not convinced that represents a change in what you do, nor in your relationship with your employer. If you are doing the same (or substantially the same) as before, possibly artificially separating aspects, then you are still an employee in the eyes of HMRC.

johngruer
Posts:10
Joined:Mon Jul 19, 2010 2:25 pm

Re: Current job changing from PAYE to Self Employed, New job PAYE

Postby johngruer » Sun Feb 17, 2019 1:24 pm

Looking here

https://www.employedandselfemployed.co.uk/tax-calculator

When I view tax for just the self employed aspect, it is not.al.and expected. When I add my other job (employed) then even though that is PAYE the tax jumps up on my S/E job ... It doubles.

Is this right?

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Current job changing from PAYE to Self Employed, New job PAYE

Postby robbob » Mon Feb 18, 2019 11:57 am

When I view tax for just the self employed aspect, it is not.al.and expected.
You have lost me here - not sure what you are saying or asking to be honest.
When I add my other job (employed) then even though that is PAYE the tax jumps up on my S/E job ... It doubles.
That MAY make sense if your employment income has used all your personal allowance then its basically 20% on all se income to 8.2k and 29% on marginal profits over 8.2k ish - thats presuming h igher rate tax doesnt apply

johngruer
Posts:10
Joined:Mon Jul 19, 2010 2:25 pm

Re: Current job changing from PAYE to Self Employed, New job PAYE

Postby johngruer » Mon Feb 18, 2019 12:01 pm

When I view tax for just the self employed aspect, it is not.al.and expected.
You have lost me here - not sure what you are saying or asking to be honest.

Apologies what I mean is if I enter 0 for employed income, that is what I see.

When I add my other job (employed) then even though that is PAYE the tax jumps up on my S/E job ... It doubles.
That MAY make sense if your employment income has used all your personal allowance then its basically 20% on all se income to 8.2k and 29% on marginal profits over 8.2k ish - thats presuming h igher rate tax doesnt apply

OK so based on £18000 S/E income, and £43000 PAYE what would your thoughts be?

Thanks

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Current job changing from PAYE to Self Employed, New job PAYE

Postby robbob » Wed Feb 20, 2019 9:19 am

OK so based on £18000 S/E income, and £43000 PAYE what would your thoughts be?
Yeah thats about right - ish.

Marginal income over 46.3k this year is taxed at 40% - so thats 6.5k ish tax on sole trader income of 18k before factoring in the NI - if we treat this income as the income subject to higher rate tax (one of the two sources must be taxed at higher rate - practicably speaking this is easier thought of as the added on income taxed at that higher marginal rate)

So employment has 12k ish covered by pa and 31k taxed at 20% = 6.2 k ish before adding in NI

So double up despite much lower income :(

Note if you have dependent kids living with you and if you or your partner is claiming child benefit - then once your income exceeds 50k then you will have tax charge to pay back some or all of the benefit they or you have received - note whether they are your kids or not has no relevance !!!once you live with someone you are potentially responsible for paying back all child benefit they may have claimed !


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