Can I be both employed and self-employed?

Being both full-time employed and self-employed is actually quite common, so the short answer is yes.

Let’s look at some situations.

A. Being full-time employed and self-employed on the side

For example: Rebecca works as a full-time developer for TaxScouts but she also writes software for her own clients via PeoplePerHour — she needs to register as self-employed and pay tax on this income.

What you need to do:

1. check if you need to register
2. register as a sole trader with the HMRC
3. make sure your tax code is correct
4. submit a personal tax return each year for your self-employment income.

How much tax will you pay?

B. Working through an umbrella company

An umbrella company is a business that acts as an employer to freelancers:

• Your client pays it for your work
• The umbrella company pays you a salary and takes care of taxes via PAYE.

What you need to do:

• check with your umbrella company — they should pay taxes for you.

C. Not being sure if you’re an employee or subcontractor

What you need to do to figure out if you’re an employee:

• ask your employer for your payslip
• check your status online with HMRC.

D. Doing business through your own limited company

In this case you’re actually both an owner (“shareholder”) and employee of your own company (“director”), but not self-employed.

What you need to do:

• submit a company tax return each year
• the company will pay tax on its profits first (minus costs, including salaries)
• either pay yourself a salary (and pay taxes through PAYE) or an annual dividend (and pay dividend tax), or both
• submit a personal tax return as well if your dividends are over £10,000.