Question submission date: April 2023

Full Question: “I’m contracting in addition to getting paid via PAYE – what’s the best way for me to work, and will I get taxed twice?”

We will break this question down into two parts, firstly the best way for you to work, and secondly, whether you’ll be getting taxed twice.

What’s the best way for me to work?

The best way for you to work will always depend on your individual situation. We have clients that work solely through a Limited company, some that are currently working through an umbrella company and some that use a mixture of the two. A lot of this depends on the agency or end client and how they will want to operate. After this, it is usually then based on which model will reduce your tax liabilities the most (although the day rates tend to be vastly different to compensate for the different tax rates). Another consideration is the responsibility that comes with having a Limited company and the various filing obligations – something we would be happy to help with.

Will I be paying tax twice?

This is a little trickier to answer. During the year, it is quite possible that you will be over or under taxed when you’re part of two or more PAYE schemes. However, this can be resolved easily either during or shortly after the tax year. It’s either a case of getting one of the tax codes adjusted to take account of all your income streams during the year, or contacting HMRC after the tax year has ended (this would be by submitting your self-assessment tax return or simply by calling them if you do not need to complete a tax return).