PAYE plus side income
3+ million people make side income in the UK. This means you have a “normal” job, typically paid through payroll (PAYE) as well as income on the side. Income on the side can range from driving an Uber to giving tutoring lessons to renting out a room in your house. HMRC needs to know about all your income in order to tax you properly.
As a PAYE employee, you are taxed through your job which is facilitated by your employer. Side income, ie. any income that has not had taxes taken out, is taxed in addition to the income you receive from your job.
A bonus for side income people – your first £1,000 of income is income tax-free. HMRC gives taxpayers a buffer of tax-free income. After that, you will need to pay income tax as well as national insurance, just like a sole trader
As a PAYE employee, you pay Class 1 national insurance. As a sole trader and side income earner, you will need to pay Class 2 and Class 4 on top of your Class 1.
Side income tax can be tricky if you don’t know what you’re doing. You could potentially pay more tax than you need to without proper guidance. Finmo advisors and accountants are here to offer you that guidance as you complete your Self Assessment. This is all done for less than half the cost of a high street accountant.
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