I’m totally clueless when it comes to tax - I know with my day job it all comes out at the source because it’s by PAYE, but how does this work if I make any additional money on top of that job? How do I pay tax on it? I know what will come out of it from this income tax calculator but unsure where to go to pay it. Has anyone else done this and can suggest what to do?
As a full-time, self-employed individual, I make quarterly estimated payments to the IRS and to my state. But that’s US, and I don’t have any other jobs. Probably best to check with an accountant.
I’m in the UK and I worked for myself for a while - it is more complicated if you work another job too. You can pay tax on your Graphic Design work by Self Assessment. You need to register on the Government website to start but there is a lot of help if, like me, you don’t know what you’re doing.
Once a year you fill in an online form with details of expenditure, invoiced income and so on. I’m pretty sure the online form has a bit to declare other income including PAYE so that should be straightforward.
One thing I noticed is Annual Investment Allowance. You declare any expenditure on equipment (like a computer) and this comes off the top of the tax you have to pay. In addition to this you can make allowance for depreciation of capital assets (like a computer) over 4 years and this comes off the tax you have to pay. In effect, the tax man is paying for your computer twice. All legal.
I used to look forward to doing my Self Assessment every year because they always ended up owing me a couple grand.