How to make secondary income taxable?

[timefactor]

I'm a workpermit holder in this country since 2002. I've an annual income of £39k. Also i do consultancy / training services in IT & audio/video field, for this i'm getting cash/cheque-in-hand (approx. £500 per month).

Could anybody let me know how can i convert this income to taxable income?

REASON: this will enable me to get HSMP to do full time consultancy, which is much more benificial

Thanks in advance

TF

[lemess]

You don't have to 'convert' it into taxable income. it already is !!

I am assuming your normal job deducts tax on a PAYE basis so you just need to declare it on your tax return and pay up the additional tax due by 31st jan every year. am i missing something ?

[timefactor]

Yes, in regular job employer deducts the tax for £39000. I've never done any tax return. I guess the employer is doing that for me.

If that the case, can i ask employer to include other earnings as well in tax return?

[John]

Timefactor, your second job? Are you actually self-employed? If so you need to tell HMRC about the self-employment. Not doing so will render you liable to penalties.

[timefactor]

No John, I'm on workpermit and not self-employed. Got all money / remuneration as cash/cheque in hand

Please advice

[John]

Do we have a terminology problem here? The £500 per month you mention ... on what basis do you receive that?

If you are employed by someone, why are they not applying PAYE tax and NIC to those earnings?

Or if you are not employed by whoever pays you that money, are you self-employed? Is it one person/company paying you that money, or a number of different people who collectively pay you about £500 per month?

Just trying to work out the basis of why that money is paid to you?

[timefactor]

1. I work with company XYZ for full time (monday to friday) - £39000 (they deduct tax / ni contributions from monthly salary) <--they ownes my workpermit

2. I give consultancy / services to people who approch me - £500 per month (for this i'm paid by cash / cheque, as clients are individuals)

If i can make this £500 as taxable income, i'm eligible for HSMP

Any advice much appreciated

Thanks
TF

Do we have a terminology problem here? The £500 per month you mention ... on what basis do you receive that?

If you are employed by someone, why are they not applying PAYE tax and NIC to those earnings?

Or if you are not employed by whoever pays you that money, are you self-employed? Is it one person/company paying you that money, or a number of different people who collectively pay you about £500 per month?

Just trying to work out the basis of why that money is paid to you?

[basis]

2. I give consultancy / services to people who approch me - £500 per month (for this i'm paid by cash / cheque, as clients are individuals)

If i can make this £500 as taxable income, i'm eligible for HSMP

Interesting.....Can you really do that legally ? I thought while you are on WP you can only be gainfully employed in the UK with the employer and in the job mentioned on the Work Permit.

[John]

Timefactor, that sounds like a self-employment to me .... and indeed you should tell HMRC about it. Not to do so renders you liable for penalties.

But I also agree with Basis. Why do you think you can legally do this work?

[indian_in_uk]

2. I give consultancy / services to people who approch me - £500 per month (for this i'm paid by cash / cheque, as clients are individuals)

If i can make this £500 as taxable income, i'm eligible for HSMP

Interesting.....Can you really do that legally ? I thought while you are on WP you can only be gainfully employed in the UK with the employer and in the job mentioned on the Work Permit.

Yes, I don't think you can do this legally. while you are on WP you can only be gainfully employed in the UK with the employer and in the job mentioned on the Work Permit.

[Dawie]

Actually you can do this work if it falls under the conditions of supplementary work which you are allowed to do as a work permit holder.

This topic of supplementary work on a work permit has been discussed at length here: http://www.immigrationboards.com/viewtopic.php?t=6679

[timefactor]

Never thought about legal aspects. I started as hobby (what i'll do in weekends otherwise), but people started paying me and i simply accepted.

If you all feels this is illegal, i'll speak to employer whether they can accomodate this in tax returns. They knows i'm doing consultancy in spare time.

[John]

Dawie, many thanks for pointing that out ... about supplementary work. But from the topic you mention :-

The work permit holder is not allowed to enter self-employment, set up a business or join another business as a director or partner. If a work permit holder wishes to be self-employed or set up a business they will need to apply to the Home Office (Immigration and Nationality Directorate) for the appropriate permission to do so. Please note however that if this permission is granted this will invalidate any current work permit.

So the work of this type cannot be done by timefactor. We are clearly talking about self-employment here. And if the person formed a company and worked through that instead, well that would amount to setting up a business, so that would not work either.

Timefactor, even though you are not allowed to do this work, that does not make it non-taxable. You are self-employment and must tell HMRC about that self-employment .... even if the income is going to cease forthwith.

[basis]

Dont want to really give advice to evade tax etc here. But if the money recd is in cash only then check the possibility to not to show it at all. Show that as received from your friends as gift etc. The amount does not appear big enough......

Otherwise your untimely honesty could cost make your Work Permit invalid and further probs in ILR and naturalisation etc......

[Dawie]

Yeah, I must admit it's a confusing bit of regulations. The regulations say that you can perform supplementary work but cannot be self-employed, which basically means that any supplementary work you do must be taxed as if you are a PAYE employee of whoever you are doing the supplementary work for.

[timefactor]

Thanks guys for sorting out.

I'll go back to the employer and check with them whether this income can be accomodated in any way as overtime / other allowance etc.

Hope this will make my supplimentary income legal

thanks

[basis]

Should be possible...but what abt income in prev yrs....

[timefactor]

- in cash and no traces of this in any bank.

[John]

This Board is not prepared to allow any more posts that involve a definite criminal act ..... tax evasion! Any more mention of that and this topic will be closed without further notice.

The income of about £500 is clearly taxable. That aspect needs to be dealt with ... legally!

[timefactor]

Sorry if offended. Don't want to do anything illegal, just want to know how to show this as a taxable income, which helps me in future for HSMP and to start-up my own consultancy services.

This Board is not prepared to allow any more posts that involve a definite criminal act ..... tax evasion! Any more mention of that and this topic will be closed without further notice.

The income of about £500 is clearly taxable. That aspect needs to be dealt with ... legally!

[basis]

IMHO The bigger question and hence violation of legal provisions is the work beyind remit of work permit. If you failed to show income in some year you can always add it afterwards by filing a revised return.

But braking immigration laws is dangerous.....generally no lee ways....

Doesnt mean one should evade taxes though or even think about it...

[Dawie]

IMHO The bigger question and hence violation of legal provisions is the work beyind remit of work permit. If you failed to show income in some year you can always add it afterwards by filing a revised return.

As far as I can see the only provision of the work permit regulations that he has broken is that he was paid for his supplementary work as a self-employed contractor. He could always give the money back to the employer who he did the supplementary work for and ask that the employer pay it back to him as a PAYE employee less any PAYE taxes and national insurance contributions.

Besides this aspect of the supplementary employment, he has broken no other laws as supplementary work on a work permit is perfectly legal provided it falls within the provisions given!

[timefactor]

Yes the same level of skills mentioned in WP. And only after work hours and with the knowledge of employer.

As far as I can see the only provision of the work permit regulations that he has broken is that he was paid for his supplementary work as a self-employed contractor. He could always give the money back to the employer who he did the supplementary work for and ask that the employer pay it back to him as a PAYE employee less any PAYE taxes and national insurance contributions.

Besides this aspect of the supplementary employment, he has broken no other laws as supplementary work on a work permit is perfectly legal provided it falls within the provisions given!

[basis]

Fine then if you all are satisfied that everything is well within the remits of applicable laws then where is the problem ?

Good luck !!