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I am a full time student, studying in the UK with UK address. I would like to do a one time job for a company based in the USA. It will last about one month, and is mostly about creating a video animation and providing it over FTP. The value of the job is cca. 2000 GBP.

Can you explain to me what would be the best way for me to do this job? I don't understand if I would need to create some kind of business to do this, or I can do it just as a "person".

I don't plan on having other jobs soon, as I can only afford to do jobs in the summer. So this will be a one time only thing. I don't think its worth creating a company for it.

How does student internships work? I know companies don't have to pay tax for student internships. But is it because some kind of support to students, or it is just because students are not using their personal allowance? I have not used any of my personal allowance and this job would be far less then the personal allowance currently in the UK.

How can I get the most money out of this job?

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If this will be your sole income for the year, going self-employed is the best way to do this:

  • The US company can write your pay-check off as a standard expense
  • Personal allowance from HMRC allows self-employed payments up to £7,475 tax-free
  • Best of all, minimal administration: you can register with HMRC up to 3 month after you issue your first invoice. It's, like, having a demo version into freelancing: if it works out, great! If not, they don't even know you :)

So, here's how to go at it:

  • Take the job, do it well, issue an invoice to the US company
  • Payment-wise you can do IBAN international transfer, if you can negotiate the transfer cost to be the burden of the company; otherwise I'd go with Paypal -no plus international transaction fees.
  • After the payment came through, register with HMRC (there's a short interview involved, but nothing that Joe Taxpayer can't hope through -all they want to make sure, is that you're registering because you're pulling cash in, and not for bogus reasons)
  • Optionally, if you're certain this will be your sole income for the year, dissolve being self-employed immediately.

Total cash in: £2000

Total Tax paid: £0

Admin overhead: approx 3 hours.

Legit: 100% :)

Edit:

Can you tell me that in my case what are the required fields on the invoice?

If you're non-VAT registered, there are no legal requirements as to what information you need to put on the invoice -it literally can be a couple of numbers on a napkin, and still be legit.

With that said, to make a professional appearance, my invoices are usually structured as follows:

  • Header: trading name, registered address of residence
  • Top line: INVOICE

Left side:

  • Date: [Date date of issuing]
  • Invoice no: [client-specific, linearly incremented invoice number, eg. bigcorp-15]
  • To: [name of client, or corp]

( Sidenote: why client-specific incremental numbering? Why, so they can't make educated guesses to the number of clients I have at any given time :) )

Right side:

  • From: [my name]
  • NI number: [my NI number -as a unique identifier for my business]

Center table:

  • Table header: Date, Description, Amount £
  • One row for each specific work done -either broken down into larger (multi-day) tasks, or aggregated into a single row
  • Bottom line: Total contract work done: £amount

And so far, none of my clients missed any fields, so this should have everything they need to :)

Hope this helps, but keep in mind, all of the above is synthetic sugar on the top -ultimately, the relationship you share with your Clients is the thing you will (or will not) get paid for!

Edit#2: The voices in my head just pointed out, that I've totally omitted National Insurance contributions in the above. However, and I quote HMRC:

If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance contributions.

Hence, this won't change the numbers above, either -just make sure to point this out during your registration in the office.

  • Thank you very much for the detailed answer. Can you tell me that in my case what are the required fields on the invoice? 1. My name, 2. my postal address, and 3. IBAN or PayPay? – hyperknot Jun 6 '11 at 18:52

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