Letting HMRC KnowIf you believe that you can work as a self-employed individual/ contractor in addition to your day job, you just need to let HMRC know the change in your circumstances. You'll need to pay Class 2 NI and applicable income tax, and that's it! An accountant to file the income tax is something at your discretion---you don't need to hire an accountant if you can do the required tax calculations yourself.
TaxesMandatory class 2 National Insurance (NI) contribution is at the flat rate of £2.50 per week. You are exempt from this contribution if the earnings from your self-employed business are lower than £5,315 for the year 2011-2012 .
Examples of Work You Can DoSome examples of self-employed work that you can do while remaining fully employed in your day job are Google Adsense based earning, developing iPhone/ Android/ Blackberry applications, writing articles, etc. Freelance websites like vWorker and oDesk can also be used to earn some extra quids.
Of course, you can also work "offline" if you want.
Business Banking AccountThough not required, it's recommend that you also make arrangements of the following:
- Open a business banking account and keep your self-employed revenue and expenses limited to that account. This eases all financial calculations. I have personally used (and liked) HSBC Business Banking accounts . There are no charges for this account for the first 18 months of your business.
- Use a business name. This is not required if you are just self-employed, and are not forming a company. But it's much more professional and seems logical for future transition into a private company/ partnership. HSBC, for examples, gives a cheque book with "<your name> trading as <your business name>". Thus, cheques in your name or in your business name can both be deposited in the same account.