Start a business while you're still employed

Tax and intellectual property rules apply across the UK. The contract, working time and dismissal rules described here apply in Great Britain. Northern Ireland differences are noted where they matter.

What limits a side business

Your employer cannot stop you on its own say-so. Your contract, including any handbook that forms part of it, and the duties the law adds to every employment set the limits.

The main legal duty is loyalty. You must not make a secret profit from your job, work in competition with your employer or share its confidential information. A business that neither competes with your employer nor harms it falls outside the duty.

Check your contract and handbook

Read your contract and any staff handbook before you start trading. Check for a clause that bans other work or needs your employer's consent, a conflict of interest or outside interests policy, confidentiality terms, clauses on who owns what you create, rules on using company equipment, systems and paid time, and restrictions that apply after you leave.

Whether a clause banning other work binds you depends on the wording of your own contract.

Telling your employer

Civil servants should declare paid outside work and seek their line manager's approval where it could affect their role. Telling your employer is also sensible when your business is close to your day job, because it removes doubt about competition and about who owns what you make.

Working hours and tiredness

The weekly working time limit counts your time working for employers. Hours across 2 employed jobs are added together. You can only exceed the limit if you agree in writing, and your employer cannot force you to.

Working so many hours on your business that you are too tired to work safely at your job can breach your duty of loyalty.

Using your employer's equipment and information

Your contract and IT policy decide whether you can use your employer's laptop, phone, software, premises or paid time for your own business. Doing so without permission is likely to breach policy and can be misconduct.

Never use customer lists, pricing or staff data from your job to build your own business.

Ideas, inventions and creative work

Who owns an invention or creative work depends on your duties and on whether you made it in the course of your employment, not on whose equipment you used. Keep dated records that separate what you create for your business from what you create for your job.

For anything close to your day job, ask your employer to confirm in writing that the idea is yours.

Restrictions after you leave

Your contract may stop you working for a competitor or contacting your employer's customers for a set period after you leave. A covenant applies to what you do after you leave, so it can restrict a business you started while employed.

An employer will not usually be able to enforce a restriction unless it is clear, specific and limited in time. Breaching one can lead to court action. Check your covenants before you resign.

Tax when you are also paid through PAYE

Your salary stays in PAYE. Profit from your business goes on a Self Assessment return. You have one Personal Allowance, shared across both incomes. You pay Class 1 National Insurance through PAYE and Class 4 on business profits through Self Assessment.

You can start trading before you register. A return reports a tax year that has ended, so income you earn this tax year goes on the return due the following 31 January. If you also pay tax through PAYE, HMRC can collect a small Self Assessment bill through your tax code instead of a lump sum.

Where to get help

If your employer raises your side business as a problem, ask the Acas helpline before you reply. If your employer dismisses you over it and you have enough service, you can bring an unfair dismissal claim. In Northern Ireland, ask the Labour Relations Agency.