Hi i am emplyed full time and pay PAYE, when i took the job…

A taxpayer's tax affairs are a private matter and there is no reason that your employer should be aware that you operate a separate business on a self-employed basis from that point of view. However, he might not be too happy that you appear to be using your job as a way to earn money.

You have three months from the point that you become self-employed to inform the tax office on Form CWF1. If you miss that deadline, you will incur a penalty of £100. You also need to start paying Class 2 National Insurance contributions. You can do this by monthly direct debit or by quarterly payments. The form to pay by direct debit is here. Alternatively, you can register as self-employed online here. The current rate of Class 2 NIC is £2.30 per week on earnings over £4,825. Income Tax and Class 4 NIC on your profits is paid twice a year, on 31 January and 31 July. You don't pay your tax on self-employed income as you do PAYE on your earnings monthly as you do as an employee.

You will need to complete an annual tax return on which you will have to disclose all your income. Depending on how complex your self-employed accounts may be, you might want to consider appointing a local accountant to complete these and the annual tax return for you.

As far as records are concerned, basically you need to keep details of income from the business and of any expenses that are incurred in the running of that business. The simplest way to decide whether an expense is business related and therefore tax deductible is to ask yourself whether the money you've just spent has anything to do with your business. If you can let me have some information as to exactly what it is you are doing on a self-employed basis then I will be able to give you a better idea of what you need to do as far as record keeping is concerned and what sort of expenses may be deductible for tax purposes. Would you also let me know the date you started to earn money on a self-employed basis.