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You cannot wait for HMRC to take the initiative and get in touch with you first.

It makes no difference if you are already paying tax on your employment income through PAYE.

The casual income is then calculated and taxed in the same way as business income, as described below. It is currently HMRC policy that all new businesses should register with them, regardless of size and even if there will be no tax or national insurance to pay.

You only register as a self-employed person once, regardless of how many different businesses you have.

If your extra income comes from e Bay or other similar online selling, you might find this page helpful: Paying tax on e Bay income.

If you are unsure, and do not want to risk the consequences of making the wrong choice, you cannot go far wrong by treating it as a full business.

Running a business through a separate limited company is a much more complicated set-up, and beyond the scope of this page.

The exact proportion will depend on whether you have a dedicated office, or just a desk in the corner of a multi-purpose room that you use once a week for admin.

The purchase of equipment, which is generally more expensive items that are going to stay in your business for more than a year (rather than for sale as stock), is not a business expense.

For expenses with joint business and private use, such as telephone and motoring expenses, you can usually claim the business proportion, which might be 10% or 25% if you also have a full-time job.

You can also claim a small proportion of your household running expenses, to cover using your home for business purposes.

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Your PAYE tax code will not need to change, unless, when you are completing your tax return, you ask for the tax on your self-employed work to be collected through your wages in the following tax year.

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