Tax Laws on Extra Earnings ?

I am currently employed but have an option of earning extra cash working on the side (about 拢4000 per year) self employed what are my options , tax etc. etc ????

There are a couple of things to think about here in terms of how you may be taxed.

Assuming that it is not additional employed income (and the rules are not anywhere near as cut and dried as Steffi would seem to suggest - partly the fault of government's bad legislation, partly the fault of very poor thinking from the tax man), then I would be asking whether the money actually was regular extra cash from a regular kind of self employed work (which would be taxed one way) or whether it was occasional payments for a wide range of extra things you may end up doing (in which case it may be taxed in a different way).

If you do have the opportunity to be self employed here for this 拢4000 or so a year income, then you will have to register as self employed. This is actually very easy - just ring up the tax man on 08459 15 45 15 within the first three months of starting (don't try to register before you start - they can't cope with that).

They may then try and ask you for "Class 2 National Insurance" which this year is 拢2.30 a week. However if you earn less than 拢4,825 from your self employment you dont have to pay this - ask them for a Class 2 NIC exemption claim form (you wont get offered this automatically).

If your total sales amount to less than 拢15,000 then filling in your tax return is really simple - you get the self employed supplement (six sides of A4) and ignore most of it - just a couple of boxes to fill in - total sales and total allowable expenses. You then get taxed on what is left over (the profit).

At the level of income you suggest, you will be below the threshold for Class 4 NIC, so no additional tax to pay there.

Any tax that is due is then payable on 31 January following the end of the tax year in which you incurred the profit.

Alternatively, you already have a main job, the tax man will probably simply adjust your tax code to collect the underpaid tax (so long as it is not too high) through your normal regular wage (although your employer will not know what the source or type of your additional income is).

The tax return gets sent to you automatically each year once you are registered self employed. If you fill it in by hand, you have to send it in by 31 October following the end of the tax year. If you fill it in online, you have until 31 January following the end of the tax year.

If you are unsure of your status, you could ask the tax man (from whom the answer will err towards your being employed, which increases your tax and that of your employer, but whose advice is "free" - it simply costs you in tax later) but my view is ask an accountant (who will tend to err on the side of what the law actually says rather than what the tax man would like it to say). Most accountants will give you an initial consultation free anyway so this also wont cost you - and you wont end up paying silly tax levels either.

Hope this helps

David Nicoll
"the accountant with attitude"

You say you have the option to "earn" extra cash. You can't decide to be self-employed or employed. Certain criteria have to be met. If there is any doubt, ask local tax office to put you in touch with a status inspector. There aren't really any "options".
If you are employed at second job, tax is deducted at basic Rate (20%) of Higher Rate (40%) depending on earnings at main job. If you are self-employed, level of taxation will be the same, but you pay twice a year and have to register self-employment with tax office. Then you have to complete annual tax return. In addition to tax, you may have to pay Class 4 NIC.

You'll be responsible for paying the tax & NIC due.