Income tax

[Pongotastic]

Hey all, I just had a query about income tax and more specifically tax rebates.

I work in sales, have done for the last year or so. I receive a basic monthly salary and commission is paid quarterly. As a result, I earn a lot more in the months January, April, July and October but am taxed as if I earn that figure every months.

Has anyone else had a similar thing and/or have they been entitled to some sort of rebate?

Ta in advance

[Shillzz]

You get the same amount of tax deducted as PAYE each month regardless of your gross pay??

[JulieB]

The personal allowance currently of £7,475 is spread out evenly over the 12 month period.

Make sure your tax code is correct and you're not on BR because then you'll pay tax on every pound you earn. Unless you have unusual circumstances it should be 747L

At the end of the year you can calculate how much tax you should have paid and check that it's been calculated correctly

If you visit Listen to Tax Man - their calculator will work it all out for you and the National Insurance.

You can download the Listen to Taxman App as well - I find it really useful to work out Net & Gross for clients.

If you find out you've overpaid last tax year then submit a tax return by the end of this month or phone HMRC & ask them to send you a form.

[ender4]

I have a new tax question 11 years later!

I normally earn all my income through my one employed job through PAYE paying 20% tax automatically.

No other income, no dividends, no capital gains, no rental income, etc.  I’ve never done a self-assessment as never needed to do so.
 

Over the last few weeks i helped out a distant mate of a mate with some detailed advice for his company. Today he’s just transferred £2,000 from his company account into my personal bank account as a thank you payment. 

What the hell do I do now? Have I just become a self-employed consultant? Do I need to declare it somehow? Will HMRC notice and hunt me down if I don’t do anything?

[rjw63]

52 minutes ago, ender4 said:

I have a new tax question 11 years later!

I normally earn all my income through my one employed job through PAYE paying 20% tax automatically.

No other income, no dividends, no capital gains, no rental income, etc.  I’ve never done a self-assessment as never needed to do so.
 

Over the last few weeks i helped out a distant mate of a mate with some detailed advice for his company. Today he’s just transferred £2,000 from his company account into my personal bank account as a thank you payment. 

What the hell do I do now? Have I just become a self-employed consultant? Do I need to declare it somehow? Will HMRC notice and hunt me down if I don’t do anything?

Say nothing unless asked. 

[KentVillan]

1 hour ago, ender4 said:

I have a new tax question 11 years later!

I normally earn all my income through my one employed job through PAYE paying 20% tax automatically.

No other income, no dividends, no capital gains, no rental income, etc.  I’ve never done a self-assessment as never needed to do so.
 

Over the last few weeks i helped out a distant mate of a mate with some detailed advice for his company. Today he’s just transferred £2,000 from his company account into my personal bank account as a thank you payment. 

What the hell do I do now? Have I just become a self-employed consultant? Do I need to declare it somehow? Will HMRC notice and hunt me down if I don’t do anything?

I am not an accountant so better finding someone who can answer from a position of authority. However, I have to do a self assessment every year, so have been in a similar position (nowadays it’s more complicated and I get an accountant to do it).

I think you will have to fill out a self assessment for FY2023/24 (as he paid you today). Deadline for submitting that online will be 31 Jan 2025 I believe.

Because it’s such a simple transaction, and the rest of your affairs are straightforward, you should definitely be able to do this yourself on the HMRC self assessment website.

Just tuck away the amount you think you will owe (you can use a tax calculator to calculate tax for 2023/24 on your current salary, and then on your current salary + £2000 and the difference is the additional income tax).

Fill out that form and they’ll confirm the amount you owe, which will be due in 2025.

A couple of caveats - if your tax is £1000 or more, they usually ask for an additional payment (called a “payment on account”) which is sort of a prediction of your tax bill for the following tax year. Hopefully this won’t affect you.

Also, I do have a horrible feeling that once you’ve found yourself in the self assessment process, you may have to do it again in subsequent years.

There is a lot of information online about this. If you’re worried you could always find a cheap accountant who specialises in one man bands and people with side gigs, would probably cost you £150 to do the self assessment, but at least saves you the headache of getting it wrong.

Hope that’s useful but definitely double check all of this with someone who knows their stuff, because tax is confusing and easy to get wrong.

Will HMRC hunt you down? Highly unlikely.

(Edit: I originally put wrong date for self assessment - you'll need to do it in 2025 for tax year 2023/24. Also @Spoony is right that the tax-free allowance for side gig trading of goods + services is £1000, so legally you would need to declare this. @rjw63is probably also right that nobody will ever know, but you'll have on your conscience that you defrauded the British taxpayer out of a few hundred quid, and you won't be able to sleep at night for the following 10 years, also you'll have admitted it on VT, and the government has spies here. Also, none of this is advice.)

Edited April 6, 2023 by KentVillan

[Spoony]

Not tax advice, you should speak to a tax adviser. But I think that would be considered income for tax purposes. If you could get some cheap tax advice from someone who is insured it is probably worth it to avoid the headache. I THINK (not advice) than anything over £1,000 needs to be declared. Ultimately if it feels like it’s something you’re meant to do, it probably is. But because you didn’t work in expectation of payment maybe the rules are different. Worth getting an answer your comfortable relying on. 

[tonyh29]

You are allowed £1,000 a year tax free as a “side hustle” , the other £1,000 you need to declare on a self assessment ( think you have to register as self employed first ) and then HMRC will tax you accordingly .. you can claim genuine expenses on this money if you had some and offset some of the liability.

if you do nothing and get caught then you’ll be into a fine plus interest , you’d need to decide how likely that is to happen … 

[cheltenham_villa]

Just register and complete a self assessment form. You can just register the other payment and pay the tax on it. No drama

[blandy]

15 hours ago, KentVillan said:

Also, I do have a horrible feeling that once you’ve found yourself in the self assessment process, you may have to do it again in subsequent years.

Particularly with a simple situation such as @ender4's I've found it dead straightforward to stop having to do it again every year. When I was working abroad, because I was paying tax in that there abroadia for most of the year, and in the UK for a bit of the year, I had to do the self assessment (so my UK employer could claim back money off the revenue, really). But when I stopped, I just called the tax man up and said "I'm not working abroad any more" and they went through a list of basic questions, to which I said "no", and 5 minutes later it was cancelled.

Then I went and worked abroad again, and had to repeat the whole thing afterwards, and then...etc.

In terms of @ender4's situation, it would be worth fining out of the people who passed him the money have or will detail it as an expense they incurred, because if it's not detailed by them, then no one is any the wiser and I'm with @rjw63 - if it's a "gift" as a thank you, rather than an invoiced bill payment, then Mum's the word.

 

[blandy]

Oh and fwiw, trying to get the French taxman to stop pestering you for tax is nigh on impossible. The UK and Aus are a lot simpler.

[Anthony]

Tangentially, if his firm gets audited, and the payment gets thrown up, they may get in touch with you to confirm the details.

You may have to create an invoice. Actually, I'm surprised he hasn't asked you to do that already.

Edited April 7, 2023 by Anthony

[foreveryoung]

18 hours ago, ender4 said:

I have a new tax question 11 years later!

I normally earn all my income through my one employed job through PAYE paying 20% tax automatically.

No other income, no dividends, no capital gains, no rental income, etc.  I’ve never done a self-assessment as never needed to do so.
 

Over the last few weeks i helped out a distant mate of a mate with some detailed advice for his company. Today he’s just transferred £2,000 from his company account into my personal bank account as a thank you payment. 

What the hell do I do now? Have I just become a self-employed consultant? Do I need to declare it somehow? Will HMRC notice and hunt me down if I don’t do anything?

Don't worry about it. Even if your chased for the tax on it, its a one off, so may just need paying, so no drama. 

[Xela]

For £2k I wouldn't even worry about it.

[CVByrne]

18 hours ago, ender4 said:

I have a new tax question 11 years later!

I normally earn all my income through my one employed job through PAYE paying 20% tax automatically.

No other income, no dividends, no capital gains, no rental income, etc.  I’ve never done a self-assessment as never needed to do so.
 

Over the last few weeks i helped out a distant mate of a mate with some detailed advice for his company. Today he’s just transferred £2,000 from his company account into my personal bank account as a thank you payment. 

What the hell do I do now? Have I just become a self-employed consultant? Do I need to declare it somehow? Will HMRC notice and hunt me down if I don’t do anything?

It's a gift under the allowance. So it's fine.

So technically this falls under inheritance tax when gifting money. You've a £3000 annual limit.

So as long as he's not gifting money to lots of people in the same year then it's fine. Also the liability is with him not you.

https://www.gov.uk/inheritance-tax/gifts

 

Edited April 7, 2023 by CVByrne

[KentVillan]

3 hours ago, CVByrne said:

It's a gift under the allowance. So it's fine.

So technically this falls under inheritance tax when gifting money. You've a £3000 annual limit.

So as long as he's not gifting money to lots of people in the same year then it's fine. Also the liability is with him not you.

https://www.gov.uk/inheritance-tax/gifts

 

Does that still apply when the gift is paid from a company account?