I am an employee in the UK on a mid-income contract, and my income gets taxed through my employer's HR, without action needed from me. My contract allows me to do some bits of private consultancy, for which I can charge independently. This is the first time I'm earning something extra as a consultant (about £4,000), and I was told I have to issue an invoice to get paid, declare it, doing a tax return, where it will get taxed at 40% or so. As I am totally new to this process, I have the following questions:
- As a freelancer, how do I issue an invoice? Does it make sense to use Paypal or similar platforms? Do I need a VAT number? Do I have to charge VAT? How is supposed to pay the VAT?
- Are there ways to avoid/reduce the 40% tax? It seems enormous on such a small amount of income.