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I'm a full time employee on monthly salary, all done by the book.

I'm thinking of doing some part time contracting in my spare time, maybe 15 hours per week.

How can I estimate how tax will effect me, do I have to notify my current workplace of the extra jobs I'm doing, or can I handled taxes myself (prefered)

For example, annual gross salary of £25k. Side contracting rate of £100 per day (2 days worth per week) so extra £200 per week. How much of that extra money will feed the tax man?

Also, can I file taxes on my own? I don't want to have to pay for someone to do this, otherwise the net money I'm getting will come down considerably, and losing my weekends for 6 months needs to have some incentive..

  • Timo's answer looks good - one comment on "do I have to notify my current workplace". This may depend on your contract (employment agreement?), it might well matter what your sideline business is in. They might take a dim view if it was to "overlap" with their business. – sdg Nov 10 '10 at 23:16
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I would say you can file your taxes on your own, but you will probably want the advice of an accountant if you need any supplies or tools for the side business that might be tax deductible.

IIRC you don't have to tell your current employer for tax reasons (just check that your contract doesn't state you can't have a side job or business), but I believe you'll have to tell HMRC.

At the end of the year you'll have to file a tax return and at that point in time you'll have to pay the tax on the additional earnings. These will be taxed at your highest tax rate and you might end up in a higher tax bracket, too.

I'd put about 40% away for tax, that will put you on the safe side in case you end up in the high tax bracket; if not, you'll have a bit of money going spare after paying your taxes.

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Being self-employed, your "profit" is calculated as all the bills you send out, minus all business-related cost that you have (you will need a receipt for everything, and there are different rules for things that last for long time, long tools, machinery).

You can file your taxes yourself - the HRS website will tell you how to, and you can do it online. It's close to the same as your normal online tax return. Only thing is that you must keep receipts for all the cost that you claim.

Your tax: Assuming your gross salary is £25,000 and your profits are about £10,000, you will be paying 8% for national insurance, and 20% income tax. If you go above £43,000 or thereabouts, you pay 40% income tax on any income above that threshold, instead of 20%, but your national insurance payments stop.

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