Self Employed........
Discussion
I have a chance to do some contracting for a dew months over the summer. I won't be earning a fortune but enough to get some saving's together! (Probably £400 per week - Fingers crossed!)
My contract is likely to be 1st April 05 until the middle of September 05 (When I go back to uni!).
My question is what do I need to do to be self employed?
How do I pay TAX and NI?
Do I need to register with anyone that I am self employed?
What tax breaks can I claim? eg. Can I claim on my 60mile commute each day?
Many Thanks,
Phill
My contract is likely to be 1st April 05 until the middle of September 05 (When I go back to uni!).
My question is what do I need to do to be self employed?
How do I pay TAX and NI?
Do I need to register with anyone that I am self employed?
What tax breaks can I claim? eg. Can I claim on my 60mile commute each day?
Many Thanks,
Phill
pmanson said:
I have a chance to do some contracting for a dew months over the summer. I won't be earning a fortune but enough to get some saving's together! (Probably £400 per week - Fingers crossed!)
My contract is likely to be 1st April 05 until the middle of September 05 (When I go back to uni!).
My question is what do I need to do to be self employed?
How do I pay TAX and NI?
Do I need to register with anyone that I am self employed?
What tax breaks can I claim? eg. Can I claim on my 60mile commute each day?
Many Thanks,
Phill
You can register yourself as self employed online I believe, you must register within three months of starting or you can get slapped!
This application / paperwork will also cover the NI contributions. Keep a note of everything you spend/earn and keep receipts etc for everything, then go and have a word with one of the tax assist 'shops' and they will tell you if you need to do anything else!
Your best bet is to go to your local tax office they are usually very helpfull and will give you all the info you need. Keep all your reciepts as you will have to fill in a self essesment tax return at the end of the year. This is when you can get tax relief on all your expenses including traveling to and from work. The tax return can be fairly easiy to fill out but an accountant would be able to tell you everyting you can claim for.
The cost if business travel is allowable but the cost of travelling between home and work is not.
In Newsom v Robertson (1952) the travelling expenses of a barrister between his home and his chambers were disallowed. But in Horton V Young (1971) the travelling expenses of a self-employed Bricklayer between his home and the building sites at which he worked were allowed on the grounds that his business was conducted from his home.
In this case -the trade will be deemed to be carried out on the client's premises-so the travel expenses will not be claimable.
You see-this is what you need Accountant's for
In Newsom v Robertson (1952) the travelling expenses of a barrister between his home and his chambers were disallowed. But in Horton V Young (1971) the travelling expenses of a self-employed Bricklayer between his home and the building sites at which he worked were allowed on the grounds that his business was conducted from his home.
In this case -the trade will be deemed to be carried out on the client's premises-so the travel expenses will not be claimable.
You see-this is what you need Accountant's for
And don't forget Capital Allowances
or working out business v' private splitting of expenses
or loss relief claims
or knowing what constitutes capital expenditure v' revenue expenditure
or calculating what element of domestic costs you might be able to claim for if you wotk some of the time from home
Nah - no one really needs an accountant, do they?
or working out business v' private splitting of expenses
or loss relief claims
or knowing what constitutes capital expenditure v' revenue expenditure
or calculating what element of domestic costs you might be able to claim for if you wotk some of the time from home
Nah - no one really needs an accountant, do they?
pmanson said:Now I think about it, if you're putting it through as ordinary income on your Self Assessment tax form then it will probably be taxed as Income Tax / NI, which is equivalent to being caught by IR35 anyway.
We're only talking about a 5 1/2 month contract before I go back to uni.
If you were to go through an Umbrella Company or something then, depending on the wording of your contract, you might be able to put yourself outside IR35 and less tax, but as you say, it probably isn't worth the hassle for a 5½ month contract if the rate isn't that high.
>> Edited by JonRB on Friday 28th January 11:56
JonRB said:
We're only talking about a 5 1/2 month contract before I go back to uni.
Now I think about it, if you're putting it through as ordinary income on your Self Assessment tax form then it will probably be taxed as Income Tax / NI, which is equivalent to being caught by IR35 anyway.
If you were to go through an Umbrella Company or something then, depending on the wording of your contract, you might be able to put yourself outside IR35 and less tax, but as you say, it probably isn't worth the hassle for a 5½ month contract if the rate isn't that high.
What will probably happen will be:
I currently work at company 'A', at this is company is a contractor who has is own company ('B'). I would invoice company B who in turn would invoice company A.
(This is how it has worked previously during some of my shorter uni hols)
>> Edited by JonRB on Friday 28th January 11:56
JonRB said:
What will probably happen will be:
I currently work at company 'A', at this is company is a contractor who has is own company ('B'). I would invoice company B who in turn would invoice company A.
(This is how it has worked previously during some of my shorter uni hols)
Doesn't matter whether your client is Company A or Company B. The tax implications are still the same.
I thought it would be. Just wondered if this would mean IR35 wouldn't affect me.
pmanson said:Phill my friend, if it was as easy as that we'd all be doing it and there would be no need for the tax experts, web sites, insurance policies and contingency plans that are available for freelancers at risk of being 'caught' by IR35.
Just wondered if this would mean IR35 wouldn't affect me.
JonRB said:
Just wondered if this would mean IR35 wouldn't affect me.
Phill my friend, if it was as easy as that we'd all be doing it and there would be no need for the tax experts, web sites, insurance policies and contingency plans that are available for freelancers at risk of being 'caught' by IR35.
The modern day Robin Hood lol
I know of lots of temps who work in the city and have set up a ltd company in which they are the director and sole employee. They invoice the bank each week and then pay themselves a salary (nominal amount) and then the rest in dividends (to avoid NI?).
Do you know if they are likely to be caught by IR35 - some of them are on short term projects where the other members of the project team are externally sourced consultants.
Cheers for any info!!
Do you know if they are likely to be caught by IR35 - some of them are on short term projects where the other members of the project team are externally sourced consultants.
Cheers for any info!!
No no no. For a five month contract it's going to be far easier just to go through an umbrella company - lots out there eg Giant, Parasol. They'll handle all the tax and everything, you won't be self-employed so you don't have that hassle and you just get your money at the end of the month. 400 quid times 20 weeks (surely not even uni holidays are that long!) isn't much over the threshold anyway so the tax you will pay at the end of the day is minimal anyway. Might work out a tiny bit more expensive than self-employed etc. but for the lack of hassle there's really no question.
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