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Posted Thu, 01 Feb 2024 15:42:12 GMT by
I'm preparing to complete self assessment for the first time this year as I landed a higher paid job in April last year that will take my pre-tax income earned from my employer (PAYE) to £55,140. This is after deduction of pension by salary sacrifice. I receive child benefit I'm also expecting an overseas honorarium of £7900 for two research reports I prepared for an American company. This is not yet taxed as I told the American company I'm a British resident and would be taxed here. I plan to declare this to HMRC as 'overseas income' on top of my PAYE earnings. However, I read somewhere that instead of 'overseas income' this incoming amount can be declared as self employment income with a £1,000 trading allowance permitted on this by HMRC because I have done all the work from my home here in the UK, instead of overseas. I'd like to check if this is accurate, first of all. Second, I'm in my early 40s and my pension isn't great as I haven't been earning much over the years. I'm therefore aiming to pay as much as I can into my pension now that I am able to do so. I understand that I won't have to pay the high income benefit charge at all based on how much I put into my personal pension. I have already taken maxed my employers pension scheme and am going to open a personal pension in addition. The sums are all going over my head but if I paid a total of £10,000 into my personal pension, would that take me below the adjusted net income threshold for child benefit? By the end of the tax year, my pre-tax income would be £63,040 being the £55, 140 from employment plus the £7,900 'self employment' coming in at the end of this month which hasn't yet been taxed. TLDR: 1. If one performs a job for a company overseas from their home in the UK, does the payment they receive count as 'foreign income' or 'self-employed trading income' earned in the UK? 2. If I paid £10,000 into a personal pension on an income of £63,040 (before tax and national insurance) does that take my 'adjusted net income' below the high income child benefit charge threshold Any help appreciated is greatly appreciated
Posted Tue, 06 Feb 2024 14:45:47 GMT by HMRC Admin 19
  1. As no tax has been deducted on the income, you will just show this as self employment and you can then claim the trading allowance against this if applicable.  
  2. No, your adjusted net income would still be over £50,000 based on those figures and the child Benefit charge would still apply. Your Personal Allowances are not included when working this figure out.
Thank you.
Posted Tue, 06 Feb 2024 15:12:23 GMT by
Thanks very much for the response. 1. Would a pension contribution of £13,000 take my adjusted net income below the benefit charge threshold. 2. Roughly how much tax would be due on the £7,900 self employed income, please?. I'm trying to work out how much I need to put aside to pay this tax to ensure I don't pay more into my pension than I can afford it. Thanks once again.
Posted Thu, 08 Feb 2024 13:29:53 GMT by HMRC Admin 20
Hi Anonymous Mouse,
1. Yes that would bring you under  
2. Based on your other income mentioned in your original query, the self employment would be liable at 40% - £3160, if you do make the contribution as stated, this will then be liable at 20%  - £1580.
Thank you.
Posted Thu, 08 Feb 2024 16:04:41 GMT by
Great, that's very clear, thanks. Final question if that's ok, please. If I make a further pension contribution of £1580 does cancel out the 20% tax as well? Or am I right in assuming the tax on the self-employed income has to be paid regardless of how much I contribute to my pension. Thanks very much..
Posted Tue, 13 Feb 2024 14:46:46 GMT by HMRC Admin 32

Yes, the tax is still due on the self employment income regardless.

Thank you.

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