Tax advice please - 2nd job

[FlawlessBeauty]

I am self employed and work as a beauty therapist from home. This was my first year in a new area so after outgoings I'm not bringing in more than my personal allowance.

Starting in January i took on a part time beauty therapist position in a hair salon doing 17 hours per week for minimum wage. Just something to get me meeting people and definite money coming in.

They told me that they would take 20% of my pay for tax but if i didn't reach my personal allowance the hmrc would give it back once I'd completed my tax return. Is that right?
It seemed to make sense.

Now they have asked if i would like to include my wages in my tax return for my self employed business instead of them doing it, so i pay less tax. Their accountant suggested this. Is that something that would actually save me money?

They also said i would not be entitled to holiday pay if i did this. That is 91 hours per year for me.

Does anyone with experience in this matter have any advise? X

 

[squidgernetball]

If you sort it yourself, you would be classed as self employed. You're clearly not. My part timer earns about £115.00 per week. Over a year, she pays no tax unless we have a really busy time like Christmas where she earned a fair bit more and had about £2 deducted. She'll get this back. She also works from home. When she does her return, she will have her P60 showing her annual earnings for employed work and will add whatever she earns to it and may have to make a payment to HMRC. What they're suggesting is that you would be self employed, doing your own return. But you're not self employed and it's totally illegal if they do that and dictate your hours and uniform.

Vic x

 

[FlawlessBeauty]

Thanks Vic.

Because their accountant suggested it i got confused. They said i would write a letter confirming i would be doing the tax, but i thought it sounded wrong too.

I don't use an accountant so wasn't sure who to ask.

That's good. I wanted to make sure my employed tax would be refunded if i didn't hit my person allowance x

 

[hazelb]

oh dear that's another 'employer' making things very complicated:

Tell them you will do your own tax return:
You include your self employed profit in the 'self employed' section of the tax return.

Your emplyer should give you a copy of your P60 ( that will show your total employed earnings for the tax year). You fill those details in on in the 'employed earnings' section in on your tax return.

That's how simple it should be.

They must give you P60 though as it shows your pay and the tax deducted. If they don't phone the tax office for advice.

 

[AcidPerm]

It is not to your advantage to agree to this, so don't.

Remember the accountant is workng for the salon owner and trying to save them money. They are not considering your best interests in this, at all.

 

[Heidi 101]

As people have said above the accountant is working for the salon and will be looking at saving money for the salon only.

You won't be saving tax at all by putting the wage through your self employed business. If they are paying your wages and deduct 20% tax, you will simply claim that back at the end of the tax year and will not loose out.

Also, you will loose £682.50 in holiday pay if becoming full self employed by putting the wage through your business.

Best to keep as you are.

 

[FlawlessBeauty]

Thank you everyone who gave me advice.

There are two owners of the salon and one of them told me this evening that the other had gotten it wrong and that i would still get my holiday pay.

So basically either i do it the normal way. They take the 20% and i get it refunded after my tax return if I'm entitled to it. Or they pay me the full amount and i put it through with my self employed earnings and hmrc tells me how much tax i owe at the end of the year.

I'm so relieved because they have always seemed like decent people but they just don't always know what they are doing lol x

 

[AcidPerm]

I don't think they're decent people, but either incredibly naive/stupid or con artists trying to save themselves money!

Once you start including your earnings from the salon with your earnings from your freelance work, you are legally classed as self employed in the salon.
There is no choice in this.
It is an automatic consequence of you including all your earnings in your tax return as a self employed person plus you will have to pay your own NI contributions.

The salon owners might tell you that you're still employed by them and treat you as an employee but they will be acting illegally.
They cannot legally pay you holiday or sick pay because they will not be able to put you through their books as employed. To qualify for holiday and sick pay, they must be paying both your tax and National Insurance contributions. They cannot pay one without the other.

Re:Tax Allowance.

You are entitled to earn up to £11,500 in the tax year (April - March) without paying tax.

Supposing you earn £7,000 from the salon and and £6,000 from you home working, your total income is £13,000 so you will keep £11,500 and have to pay 20% tax on £1500 which will be £300.

If the salon deducts 20% of your salary and pays it directly to the taxman (£1,400) you will receive £1,100 back as a lump sum from HMRC the following tax year having kept the £300 tax due. The salon also pays your NI and this contribution is counted towards your state pension for when you retire.

An additional benefit to you if the salon pays your tax is if your earnings from home steadily increase. Suppose you earn £10,000 from home working? Your total income will be £17000. You pay tax on the £5,500 so your tax bill will be £1100. Your salary deductions will have covered that and you will still get money back from HMRC at the end of the tax year £300 (£1400 minus £1100) and you won't be suddenly landed with a tax bill of £1100 to pay.

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Don't agree to put your earnings from the salon in with your other work. It isn't in your best interests at the moment especially as they will continue to treat you as their employee. The whole point of working for yourself is to be your own boss and please yourself.

 

[FlawlessBeauty]

Thank you @AcidPerm.

I always thought of myself as fairly savvy but its been 10 years since i was employed and I've never had two jobs at the same time. It makes you realise just how much you don't know x

 

[hazelb]

There is no 'two ways of doing it'

1) Your self employed earnings ( profit )- is for work away from the salon. You will need to complete a tax return showing income minus expenses and there for your profit.

2) You are employed by the salon. They give you your pay ( with a pay slip ) and deduct your tax.
They also give holiday pay, sick pay, pay your NI and you have employment rights. As I said above this information will go in the ' earnings from employment' section for your tax return.

The tax man then works out all your tax, you may get some tax back, you may have to pay more depending on your self employed profits.

- There is NO OPTION to include your 'salon pay' as self employed earnings, as they are not to same thing.

- You employer can't tell you your are 'self employed' at the salon if you are not. Employers might seek to do this and I think many do ( it's illegal by the way ) so they don't have to give you holiday pay, pay your NI, pay sick pay or contribute to your pension.