Taking a Part-Time PAYE Job as a Freelancer

Exploring Your Options: Part-Time PAYE Roles for Freelancers
For many UK freelancers, periods of fluctuating income can prompt consideration of part-time PAYE (Pay As You Earn) employment. Whether you’re looking to maintain steady cash flow during quiet freelance stretches, boost retirement savings, or strengthen your mortgage application, a part-time role could be a valuable addition to your portfolio. However, combining PAYE employment with freelance work introduces several tax, National Insurance, and administrative implications you must address.Essential Documents and Resources
Before you start, compile the following:- Your PAYE job payslips and annual P60
- All freelance invoices, receipts, and expense records
- A list of allowable expenses for self-employment
- HMRC online account login credentials
- [Income Tax rates and Personal Allowances](https://www.gov.uk/income-tax-rates)
- [Self-employed National Insurance rates](https://www.gov.uk/self-employed-national-insurance-rates)
- [Expenses if you’re self-employed](https://www.gov.uk/expenses-if-youre-self-employed)
- All income is aggregated. HMRC calculates your Income Tax based on your combined PAYE and self-employment earnings.
- Personal Allowance. For 2024/25, only the first £12,570 of total income is tax-free. Typically, HMRC assigns this to your PAYE job. Additional income above this is taxed according to applicable brackets.
- Your employer deducts tax and Class 1 National Insurance from your PAYE wages.
- As a freelancer, you pay additional tax and National Insurance (Classes 2 and 4) via Self Assessment. Payments are typically due by 31st January (and possibly 31st July for advance instalments, known as Payments on Account).
- Monitor if your combined freelance profit triggers higher-rate tax or extra NICs; HMRC aims to prevent overpayment, but always check your records.
- Class 2: Due if profits are £6,725 or more (can be paid voluntarily below this).
- Class 4: Due if profits are £12,570 or more (percentage of profit).
- Office expenses (stationery, phone, broadband)
- Travel for business (not commuting)
- Relevant training
- Marketing and advertising costs
- Professional fees (accountants, insurance)
- A proportion of home running costs (if you work from home)
- Record all PAYE employment income, payslips, and tax codes.
- Consistently track freelance income, invoicing, receipts, and allowable expenses.
- Regularly check your HMRC online account to ensure correct tax code adjustments.
- Retain all documents for at least five years after each tax return submission.
- Register for self-employment with HMRC by 5th October of your second tax year.
- File the Self Assessment by 31st January (following the tax year’s end).
- Make any Payments on Account by 31st January and 31st July if required.
- Review your expected combined annual income and tax position
- Organise your record keeping for seamless Self Assessment
- Check your PAYE tax code once you start your new role
- Speak to an accountant or tax adviser for tailored guidance
- Visit HMRC resources for up-to-date thresholds and advice
Useful online guides include:
Combining PAYE and Freelance Income: What You Need to Do
1. Understand Your Tax Position
Income Band | Tax Rate (2024/25) |
---|---|
Up to £12,570 | 0% (Personal Allowance) |
£12,571 – £50,270 | 20% (basic rate) |
£50,271 – £125,140 | 40% (higher rate) |
Above £125,140 | 45% (additional rate) |
2. How Tax and NI Are Paid
Self-Employed NI Thresholds (2024/25):
3. Allowable Expenses: Reduce Your Taxable Profit
Be sure to record and claim valid business expenses from your freelance earnings, such as:For a full list, consult [GOV.UK’s overview](https://www.gov.uk/expenses-if-youre-self-employed).
4. Keep Thorough, Separate Records
5. Meet Key Administrative Deadlines
Troubleshooting: Common Issues and Solutions
Incorrect Tax Codes: Sometimes, HMRC may not update your PAYE tax code quickly when you start or stop freelance work. If you’re paying too much or too little tax, contact HMRC or use their online portal to adjust your code.Double National Insurance Contributions: Rest assured, HMRC offsets Class 1 NI from employment against self-employed contributions so you don’t overpay overall. Always check your calculations and speak to HMRC or an accountant if unsure.
Confusion Over Trading Allowance: If your freelance earnings are less than £1,000, you might not need to file Self Assessment. However, if expenses exceed that allowance, filing could still be beneficial.
Mortgage and Lending Criteria: Lenders often regard PAYE income as more stable than freelance earnings. Consider your timing if major borrowing is planned and consult an advisor if needed.
Eligibility for Benefits: Changes in combined earnings could affect Universal Credit or tax credits. Use government calculators to check your situation.
Final Thoughts and Next Steps
Taking on a part-time PAYE role as a freelancer can provide additional security and flexibility, but it adds complexity to your tax and administrative responsibilities.What should you do now?
Keeping compliant and informed will allow you to harness the advantages of both roles, supporting your freelance career with additional stability and peace of mind.