The Self-Assessment tax return deadline is looming close for those self-employed income required to declare their income for tax purposes by 31 January.
If you earn self-employed income whilst also earning through Pay-As-You-Earn (PAYE) or employment, you may think you are already paying your taxes through your tax code automatically, but that is not the case.
You are still required to declare your self-employment income via a Self-Assessment Tax return, but you do have the option to spread the tax due from self-employment income over a period of time via your PAYE tax code but only under certain conditions.
These conditions are:
- You owe less than £3,000 on your self-employment tax bill
- You already pay tax through PAYE, e.g. you are an employee or you receive a company pension
This means that if you are in the transition period where you are working towards full self-employment whilst you work part-time in employment, you may be able to pay your self-employed tax bill as you do you for your employed income, via your tax code.
Please be aware that this option is not available in the following circumstances:
- You do not have enough PAYE or employment income for the tax to be collected via your tax code. The personal allowance for the current 2019/20 tax year is £12,500, and thereafter PAYE income is taxed. Your employed income must therefore be above this threshold.
- If you pay more than 50% of your PAYE income in tax, in other words, if the balance of employed work outweighs self-employed work
If you think you may be eligible to pay for your self-employed income via your tax code, you will need to submit your self-assessment tax return by the end of December, a month earlier than the standard self-assessment tax return deadline of the end of January.
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Written by Shaima Todd.