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“I’m a journalist working on a casual basis, but it’s my employer who deducts tax and national insurance contributions from my wages. We also both (me and employer) pay money into a workplace pension scheme. However, I’m also an artist and from time to time I earn some money doing that too, although what I make is way below the personal tax allowance threshold. Should I become self-employed? But if so – what do I tell the taxman I am – a journalist or an artist? And if so, can I still pay into my workplace pension? Or should I instead remain on PAYE at work and become self-employed as an artist and then declare my journalist wages when I do my tax return?”
Tim Walford-Fitzgerald, our private client partner, says:
“It is a common misconception that you can be either only employed or only self-employed. In some cases this could possibly arise from the mistaken belief that you are automatically self-employed if you work for more than one person. It is perfectly possible to have several employed jobs and to be both employed and self-employed at the same time in different roles. You are probably employed as a journalist and have a separate trade as an artist.
“While there are plenty of people who are self-employed on casual contracts there are also many who are employees as well. It sounds as though you are an employee so the PAYE deductions are correct, and you get to benefit from your employer’s contributions to your workplace pension.
“You may feel self-employed as an artist but the rules are a bit more complex. If you are making money then HMRC will probably accept you as self-employed – if you are making a few sales to offset the cost of new materials it might just be a hobby!
“You will already be using your personal allowance against your employment income – as a journalist as it is taken into account when working out the PAYE you have deducted – and you only get a single personal allowance, not one for each source of income. But there is a trading allowance that means you can make sales of up to £1,000 tax free. If your sales are over that threshold you need to consider what your profits are, taking any expenses into account.
“If your artistic income is over the £1,000 threshold then you will need to fill out a self-assessment tax return to ensure you are paying the right tax and National Insurance. Doing so will not change your status as an employee, nor mean you become self-employed. Self-assessment is simply a mechanism to declare all of your taxable income to HMRC. So you must declare your employment income on the form and your earnings from sales of your artwork in order to make sure you are paying the correct amount of tax and National Insurance.”