One-off consultancy income - do NICs apply?

One-off consultancy income - do NICs apply?

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Hello everyone

i read in an article recently that a one-off piece of consultance outside an individual's normal duties as an employee can count as self-employed trading income not liable for PAYE.

i'm looking into whether this could be a viable argument but I wanted to clarify the NIC position. The article states that as long as the work doesn't reoccur regularly OR exceed £5,725 it isn't necessary to register as self-employed and no NICs apply but i can't find anything else to back this up.  By the way the amount involved will exceed £5,725.

Can anyone help?

thanks

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By Euan MacLennan
30th May 2013 12:57

Some clarification needed

Are you implying that the employer is paying the employee for some consultancy work which is outside the employee's normal duties?  If so, I doubt that it could be anything other than salary subject to PAYE tax and Class 1 NIC.

If the individual is being paid by a third party for consultancy work and the third party does not consider that the individual is its employee for this work, it could regard him as a self-employed person and pay him without deduction.  However, the guidance on what to include as Other Income on the tax return specifically says that it is not for income which should be reported on supplementary schedules.  A small fee which would not attract a liability to NIC could be included as Other Income, but if a fee of more than £5,725 (the small earnings exception limit) is being paid on the basis that the individual is self-employed, I think it should be reported on the Self-Employment pages and be subject to Class 4 NIC if the fee exceeds £7,755.

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Replying to Portia Nina Levin:
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By Sarah Salton
30th May 2013 17:59

Thank you.

My view was the same of yours - that it should be employment income and taxed accordingly. However after reading an article that was clear that if there is a very distinct difference between a one-off bespoke piece of work and normal duties it may possible to argue it isn't salary, I wanted to explore it further. However on the basis of the NI point it probably wouldn't be worth considering anyway!

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