Advise please on self employed - what to do? - The Book-keepers Forum (UK)

ange25 · Veteran Member

Advise please on self employed - what to do?

RobH · Expert

Hi Angela,

Congratulations on getting the job! You must inform HMRC that you are going self employed, you can either telephone them or register on-line, copy and paste the link below into your browser and it will take you to the right place. You will then get your utr (unique tax reference) and you will be required to complete your self assessment tax return. Class 2 NICs are currently £2.40 per week (you may be able to defer these if your earnings are low (under around £5000). You will have to pay class 4 nics on taxable earnings above £5715 of 8%, but this is calculated on your tax form.

https://businesslink-online.hmrc.gov.uk/shortforms/form/CWF1ST?dept-name=CWF1&sub-dept-name=&location=40&origin=http://www.hmrc.gov.uk

Hope this helps.

Shamus · Forum Moderator & Expert

Hi Angela,

congratulations on finding the position.

I know from your earlier messages that you've just started out on the training road so you won't be covered via the ICB for money laundering yet.

Even working for someone else in a self employed capacity you have to be covered for MLR so you will need to do that directly with the revenue which I read in another note can take up to 48 days and will cost about £170.

For the role that you've already landed that you state is non accounts related.

What sort of role is it? i.e. is it through an agency or direct? Who is responsible for tax and NI contributions? Is this really self employment or temp work?

For self employment as with all things the best place to start is with HMRC. The web page that you want is : http://www.hmrc.gov.uk/selfemployed/

Also take a look at business link start ups page : http://www.businesslink.gov.uk/bdotg/action/layer?r.s=m&r.l1=1074404796&r.lc=en&topicId=1073858805

Those pages will do a far better job of explaining what you need to do than I can.

If you've actually gone down the incorporation route then I'm probably of more help as that's mine and all of my clients legal form.

not much help this time but a few pointers in there.

Good luck,

Shaun.

Shamus · Forum Moderator & Expert

Afternoon Rob,

excellent advice as always.... Told you that you were a good replacement for me during my studies!

The replacement avatar was just going to be a very temporary one as representations of myself and Bill to show others who Staedtler and Waldorf are (from another thread) but it's sort of grown on me now so may keep it.

Talk in a bit,

Shaun.

RobH · Expert

Hi Shaun,

On the employed or self employed line, I always take the view that the onus is on the 'employer', i.e. if hmrc decide that a position is employed then it is the employer who would have to bear any costs for grossing up/ers nics etc. As you will know it tends to go on weight of evidence rather than any specific ruling but often that can be potentially argued against. However if there is no contract (i always forget whether the contract is for sevices or of services) stating substitution of labour and so forth then if it came to an investigation hmrc would no doubt try to enforce employment status (and if I were advising the contractor I would suggest taking someone on as employed especially if only part time).

On the understanding that you are self employed in this role Angela, it does of course confer less benefits, ie, holiday pay, sickness pay etc. It usually costs an employer around 22% or so above the base hourly rate for a full timer, so normally as a self employed person you can negotiate a better rate! Though in the economic climate perhaps best not to go there just yet!

RobH · Expert

Hi shaun,

I like the new look! I never watched the Muppets but the only snippets I endured were from the two olg guys in the stalls. Which is you and which is Bill??!

RobH · Expert

PS, no one could replace you Shaun!

semsley · Guru

The onus, as far as HMRC is concerned, is on the company/employer rather than the s/e person (because they can obtain more money that way). But HMRC have strict rules on what is and is not classed as self-employed. There is a test (just reading questions) so that people can determine whether or not they can be classed as self-employed.

If you meet the criteria you have to inform HMRC within 3 months of becoming self-employed and will have to complete a self-assessment. If you start after 5th April you won't have one to do until latest January 2012, if before it will be 2011.

Rob has explained about NIC being dependent on earnings, however, it is a good idea to pay them to ensure a full pension (although you now only need 30 years contributions).

You need to save at least 28% of your earnings to pay income tax and NI from your annual self-assessment. You need more than this for the first one because if more than £1000 is owed you have to pay the full amount owed for the year plus 1/2 of the total as a payment on account for the following year at the end of January and a further 1/2 at the end of July. Hope that makes sense.

Shamus · Forum Moderator & Expert

Hi Rob,

according to my boy I'm the taller one.

Know what you mean about the Muppets. Its very much an acquired taste. Bit like Monty Python which people either loved or loathed... Or maybe at the time we just loved it because our parents loathed it... Now there's deep.

Notice in the previous post you were teetering on IR35 territory. Well, similar rules, different legal form.

The conservatives promised a long time ago that piece of anti entrepreneurial legislation was going to be one of the first repealed when they get back in again.

They've not mentioned it in a while so hope they've not forgotten... Best send David a reminder as I really hate us having this two tier system of limited liability entity.

Oh, in answer to your question. For employee's its contract of service. For self employed it's contract for services.

Talk in a bit,

Shaun.

RobH · Expert

Good advice from Semsley regarding being prudent and putting a bit aside for your tax bill. Of course the 28% is on profit after your personal allowance and assuming you make your payment in January then you should be covered for the payment on account part if you have continued to put some aside.

ange25 · Veteran Member

Hi rob and Shaun
Thank you for the advise, the job is working for an Inventory company (something I used to do in property in a previous life) I need to find out more information from them i.e insurances and etc - but you have def given me some really helpful information to look at in the meantime.

Can't quite agree more with Business Link - I have already set up my first interview with them, next week ; my friend had recommended them.

Thanks again - am going to digest the info you have provided me with - i will be back for more help no doubt !

I am sure not as scary as it sounds

Have a great evening

Angela

RobH · Expert

Yes IR35 still manages to raise it's ugly head from time to time. I think organisations like Accountax will write an IR35 proof contract. I think they were very expensive but they guaranteed to keep you outside the IR35 rules...not sure if any were ever put to the test and I guess they had enough in their 'fighting fund' to self insure against it! When I get a client whereby I think it is possible they may fall foul of the legislation I tell them about Accountax and say I CANNOT guarantee they are outside the scope but suggest they keep out of longer term contracts to be on the safe side.

Angela, it isn't too scary, you will be fine but please heed Shaun's advice regarding MLR for when you do accounting type self employed work. Good luck!

ange25 · Veteran Member

Fantastic - thank you for advise re IR35 and MLR etc

Off to cook dinner now :) (and drink wine!)

Angela

RobH · Expert

Angela, IR35 is just if you incorporate the business, not for the self employed...that should halve the quantity of wine needed!

PJC Bookkeeping · Veteran Member

Angela,

I agree with all the comments made so far but you probably won't need to register as self-employed until you get your first client.

BTW, well done on getting the job.

Peter

PJC Bookkeeping Services

www.pjcbookkeeping.co.uk

Ami · Veteran Member

Hi Ang,

I'm just about to do exactly the same. I've just gained a client which is also involved in property......something I also did in a past life smile

. It does not involve any accounts or bookkeeping. i'll be doing more property details and admin.

So i've also got to register self employed which I find a scary thought. So if you ever want to chat please get in touch and maybe we can help each other.

ange25 · Veteran Member

Hi Ami

Good to hear from you - I am sure we can help each other, . I also know a bit about property admin so if you need any help there as well.

Where abouts are you based?

Speak soon !

Ange

Ami · Veteran Member

Hi Ange,

I'm based in Swadlincote in Derbyshire. You probably wont know it cause nobody ever does smile

Do you know when your starting your new job yet?

ange25 · Veteran Member

Hi Ami
Don't know Swadlincote but my brother has a house in Allestree so know the Flowerpot and Derby central a bit tho he is now based in Paris now - slight change ! Had induction today good money to be earnt so thinking about being employed by them part time and self employed doing my own stuff. Going to a networking do tomorrow... it helps as i used to set these up for a friend of mine had her own bus so know the score. not selling anything at mo but good excuse for catch up and a beer and keeping in touch with contacts.
How is the studying going ?

Ange