Paying tax

[paulhutchens]

I currently have a 45 hour per week job and also do moble discos at the the weekends. what should i do as far as paying tax on this extra disco income goes? as the landlord of the pub i do discos at, has put my name on for his accounts.

[Loosehead]

Technically you should declare all your income. If the tax man finds out and decides to assess you, a bill will be forthcomming. If it's a regular thing you will eventually get discovered.

[kags]

you should notify the Inland Revenue that you have this source of income, and they will send you a Tax return to complete at the end of the Tax Year. On this you will need to show your employment earnings (from your P60) and your free-lance earnings, less expenses. If your total income from your disco work is less than �15,000 you only need to submit a simple income less expenses account. Assuming that you started since 6 April last, you will receive a return next April, and you will pay the tax you owe the following January (2007). Depending on the amounts involved, you will either be able to have the tax collected through your tax code at your employment, or you will have to write a cheque.   If the total tax due is more than �2000, you will also have to start paying on account for the next tax year, so you could find yourself with a huge tax bill on 31 January 2007. As well as tax, you will be liable for Class 4 National Insurance Contributions, which will be collected with the tax. The current rate is 8% of profits between just under �5000 and �32760. In addition, there are Class 2 National Insurance Contributions to consider, at a  weekly rate of �2.10, although you won't have to pay these if you already pay the maximum at your employment, or if you disco earnings will be less than �4345 (you still have to apply for exemption from payment even if these conditions apply). You should be putting aside around 30% of your earnings net of expenses to cover tax and Class 4 NAtional Insurance, as your full personal tax allowances will be already used up at your employment.

Only you can decide whether you declare this icome, if the Landlord is claiming the deduction for ampunts paid to you in his accounts, then sooner or later the Inalnd Revenue will catch you. You will then be liable for interest and penalties on the tax you owe. Better to declare the income and sleep soundly at night.