PAYE and Self Assessed

[Spectrum48k]

I am currently a PAYE worker.

I am planning on setting up my own company in the new year. I will do some consulting work on the side. When I have my own company I will be self assessed.

From January on I will be both PAYE and self assessed. How does the revenue reconcile this? Do I need to notify my current employer?

Greatful for any help.

 

[Domo]

If you set up a company, you will be an employee of the company, and therefore have 2 employments. You will need to notify the Revenue of your new employment to have a tax certificate issued to you.

However, I think what you mean is that you will be self-employed. In this instance you will need to register for tax with a form TR1 - you should read the Revenue booklet "Starting in Business" available on the Revenue website.

In either of the above cases, I would suggest you seek professional advice.

 

[extopia]

In practice what will happen is you will fill in a form 11 or 12 at the end of each year, detailing your income from all sources and PAYE tax paid. You will then pay the balance of tax, which will relate mainly to your consulting work. Remember if you're in or close to the 41% bracket you will be paying the higher rate on most or all of this additional income, plus PRSI and levies. So roughly half of the consulting income (after your legitimate business expenses) will be due in tax. As you don't have to pay this tax until October of the following year (Oct 2010 in your case) you can get into trouble if you don't provide for this tax bill, in other words don't be tempted to just spend all the additional income.

Best of luck with it!