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Setting up: What happens with tax when already working?

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Active Member
Thomas W Member Since: Jun 21, 2017
1 of 8

Good evening,

A friend told me about rework and I'm really interested in the prospects of setting myself up as a freelancer. I'm struggling to understand if I need to contact my local government however to say that I intend to do this?

 

I currently work full time and wanted to clarify that this wouldn't impact my current tax code by having an account on rework? Can you please explain any steps that I need to take in order to ensure that my tax code remains correct?

 

I haven't accepted any jobs as of yet as I'm concerned about the tax implications of using Upwork; I can see that VAT is charged when a member chooses to 'withdraw' their earnings from the website - is this to ensure that deductions are made so that users don't have to complete paperwork etc?

 

Kind regards,

Tom

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Community Guru
Virginia F Member Since: Feb 15, 2016
2 of 8

You may be on the wrong website - this is Upwork, not rework.

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Community Guru
Nichola L Member Since: Mar 13, 2015
3 of 8

@Virginia F wrote:

You may be on the wrong website - this is Upwork, not rework.


Rework is rather apt!  Smiley Wink

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Community Guru
Louisa J Member Since: Apr 12, 2017
4 of 8

I see that you are based in the UK.

 

You need to register as self-employed with the HMRC and submit your earnings yearly. Even if you have a full-time job.

 

Anything earnt on Upwork you will have to pay the 20% tax rate on. (Unless it pushes you into the 40% tax bracket, then you would have to pay 40% on all earnings.)

 

Your employer can take the tax owed out of your monthly pay packet or you can pay it in a lump sum yearly. 

 

Feel free to DM me, as I've been through all this. 

 

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Community Guru
Kim F Member Since: Aug 26, 2015
5 of 8

You have to register as self-employed by 5 October, so there's no mad hurry.  You'll then have to complete a self-assessment. See http://www.bytestart.co.uk/5-things-self-employed.html and https://www.gov.uk/

 

 > Anything earnt on Upwork you will have to pay the 20% tax rate on. 

 

Assuming you already earn over the threshold, you *might* be liable for tax at the 20% rate. However, that will depend on whether or not you're in profit. 

 

> (Unless it pushes you into the 40% tax bracket, then you would have to pay 40% on all earnings.)

 

No. The 40% only applies to the portion of your earnings in that tax band. 

 

> Your employer can take the tax owed out of your monthly pay packet or you can pay it in a lump sum yearly. 

 

Money you earn outside your employment has nothing to do with your employer. You have to declare it in a self-assessment and if you're liable for tax, you will have to pay it annually. However, you may also have to make payments on account. 

 

 

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Community Guru
Louisa J Member Since: Apr 12, 2017
6 of 8

 

 

>Money you earn outside your employment has nothing to do with your employer. You have to declare it in a self-assessment and if you're liable for tax, you will have to pay it annually. However, you may also have to make payments on account. 

 

Your employer can take the tax owed from self-employment out of your monthly pay packet IF you tell them to, up to £3,000. Obviously, ONLY if you allow them to. It is a good option if you can't pay it all in one lump sum and many people do use this option. 

 

https://www.gov.uk/pay-self-assessment-tax-bill/through-your-tax-code

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Community Guru
Kim F Member Since: Aug 26, 2015
7 of 8

Your employer can take the tax owed from self-employment out of your monthly pay packet IF you tell them to, up to £3,000.

 

You're right and I apologise. Having been self-employed for 25+ years, this has never been relevant to me. Although I can see many reasons why you might not want to do this.

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Jennifer M Member Since: May 17, 2015
8 of 8

40% tax LOLOLOLOLOLOL dat free healthcare baybeeee