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Do I need to run payroll

Employee has self-employment income

Didn't find your answer?

Morning all. Quick question to which I think I know the answer but would like confirmation if possible.

Client wants to employ someone at below the £118pw limit but the employee has self-employment income (nothing else).

Am I right in saying that the client does not need to register a PAYE scheme?

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JCACE
By jcace
17th May 2019 10:37

When the employee completes the starter checklist, which box is he/she going to tick?

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Replying to jcace:
RLI
By lionofludesch
17th May 2019 10:54

jcace wrote:

When the employee completes the starter checklist, which box is he/she going to tick?

I'm with jcace. Depends on whatever box the employee ticks. The questions are ambiguous. I'd interpret "job" as including self employment. Others may differ.

The safe option would be to file RTI, given that the employer knows there's a self employment.

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By legerman
18th May 2019 10:32

jcace wrote:

When the employee completes the starter checklist, which box is he/she going to tick?

They don't always tick the right box. Client had an employee who's only income was self employment (which I didn't know at the time) but she ticked I have another job, which made it a BR code. Took several weeks for employee to realise she had to ring HMRC to get her tax code changed rather than rely on them to do it automatically.

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Replying to legerman:
RLI
By lionofludesch
18th May 2019 10:46

legerman wrote:

jcace wrote:

When the employee completes the starter checklist, which box is he/she going to tick?

They don't always tick the right box. Client had an employee who's only income was self employment (which I didn't know at the time) but she ticked I have another job, which made it a BR code. Took several weeks for employee to realise she had to ring HMRC to get her tax code changed rather than rely on them to do it automatically.

Let's not overlook taxpayers' preferences here. Some of them like to pay as they go. It shouldn't alter the total tax they pay. It's their choice.

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By andy.partridge
17th May 2019 10:48

I'm too idle to research it (like you), but instinctively I'm thinking about the tax code.

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By SteLacca
17th May 2019 13:08

I believe that the "job" referred to on the starter checklist refers to employment rather than self-employment, though I can't point to anything definitive to support this.

If I'm correct, then the employee would properly choose A or B and no PAYE would be required.

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By bettybobbymeggie
17th May 2019 14:23

Interesting stuff, thanks for the replies!

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My photo
By Matrix
17th May 2019 15:04

Since he doesn’t have another job to which the personal allowance would be allocated then you use the standard tax code. Self-employment does not count, if part of the bill is paid through the tax code then HMRC will send through a revised tax code, but the self-employment is not an employment for the purposes of the new starter checklist.

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Replying to Matrix:
RLI
By lionofludesch
17th May 2019 15:16

Matrix wrote:
...... but the self-employment is not an employment for the purposes of the new starter checklist.

I'm self employed.

But I don't regard myself as "jobless".

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By Marion Hayes
18th May 2019 09:48

Matrix is right - PAYE takes priority for allowances so self employment does not count as a job.

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By CTA
18th May 2019 10:57

The use of the word “job” on form P46 (or ‘starter checklist’) does not follow statute.

If you refer to Regulation 46(2) of The Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682) you will note that the references are to “employment” rather than “job”. Indeed, statement B given in that Regulation specifically states “disregarding any self-employment”.

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