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I'm a UK citizen who works full time for a UK company. I pay taxes directly through the company (i.e. they are taken out of my paycheck). I would like to start contracting part time for a US company based out of Queensland, but just wanted to double check on the tax situation of that.

I know from this post: Do I pay taxes where I live, or where I work?; that I won't need to pay taxes in the US, but I believe I will still need to file a UK tax return.

Details:

  • Relatively low paid - I don't expect to exceed $100 a month ($15 per "project").
  • Paid through PayPall Invoice
  • Paid in US Dollars

I'm just trying to work out if it's worth it, but I can't seem to work out what tax I'm going to be paying on the job. I'm currently earning just under the next tax bracket, will this effect that?

Are there any considerations I should make regarding this? I would be interested to hear if anyone else has done something similar, is it going to cause me a lot of hassle at the end of the tax year?

It's essentially this question US Resident with a full-time job for a US company started a contracting job for a UK company in his free time but the other way around!


Edit: I am aware that: "the first £1,000 of income from self-employment - this is your ‘trading allowance’" .gov, but I don't know if this is separate to my main income.

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    Not an answer, but even if the work takes you into the next tax bracket, that only affects the portion of your income that is above the boundary, it does not apply to all your income. Apologies if you already know this, but lots of people don't so I thought it was worth saying. – Vicky Aug 28 at 13:34
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    @Vicky thanks for mentioning that. I was aware, it's actually more just whether the time spent doing the work is going to be worth my time. If I end up being taxed a lot on it then it's not really worth me doing, since it's already fairly low paid – Bee Aug 28 at 13:38
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Call HMRC and ask them if there is a limit how much money you can make this way without having to inform them about the income at all. If the amount you make per U.K. tax year is low enough, they will not want to hear from you at all. £1,100 per year may be below that limit.

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Then from 6th April 2017, the rules changed as the government introduced a new £1,000 trading allowance. This threshold change means that, as long as your gross income is below £1,000, you don’t have to pay any tax or even register for self-assessment.

There is a trading allowance which can be used if your sole income from business does not go over £1000. Though it looks like this would not apply in your situation, unless you were registering as a business and not an individual.

The correct solution for you would be to register yourself as self assessed and submit your extra earnings which would be taxed in a similar fashion to if you had just earn't more money in your primary job. You will also have to declare how much you earn't in your primary job alongside the return form, but it's fairly trivial. With foreign currency you only declare the gross amount once it has been converted into pound sterling.

I'm just trying to work out if it's worth it, but I can't seem to work out what tax I'm going to be paying on the job. I'm currently earning just under the next tax bracket, will this effect that?

Being in the next tax bracket unless your moving into the highest bracket would not be a bad thing, though you do have to take into account you may lose a significant amount more. weigh this up with the effort involved getting this extra cash.

Are there any considerations I should make regarding this? I would be interested to hear if anyone else has done something similar, is it going to cause me a lot of hassle at the end of the tax year?

First time sucks a little as you have a lot of reading to do, after which it's very simple and you can mostly use the answers from the previous year if not much has changed.

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