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  • FIRST POST
    • joharm
    • By joharm 14th Nov 17, 2:36 PM
    • 16Posts
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    joharm
    Sole Trader Freelancer - Client now says I must be a limited company
    • #1
    • 14th Nov 17, 2:36 PM
    Sole Trader Freelancer - Client now says I must be a limited company 14th Nov 17 at 2:36 PM
    I've been self employed for 13 years, registered as a Sole Trader, working as a freelance graphic designer.

    No client has ever had any issue with my self employed status, as long as I was officially registered with HMRC with a UTR number.

    However a long-term client has been in touch, saying that very soon (possibly due to the recent Uber ruling) they will probably only be able to use freelancers who are limited companies, so that they are not seen as employees.

    This client gives me a lot of freelance work per year, but I can never imagine I would be seen as being an employee by the law - it probably averages out only about 3-4 hours a week.

    Has anyone else heard anything similar like this recently?

    I want to avoid going limited if possible because the admin will be a huge pain, and my tenancy agreement forbids me from registering at my home address anyway so I would have to pay for a virtual office address.
Page 1
    • Aquamania
    • By Aquamania 14th Nov 17, 3:36 PM
    • 1,944 Posts
    • 777 Thanks
    Aquamania
    • #2
    • 14th Nov 17, 3:36 PM
    • #2
    • 14th Nov 17, 3:36 PM
    I've been self employed for 13 years, registered as a Sole Trader, working as a freelance graphic designer.

    No client has ever had any issue with my self employed status, as long as I was officially registered with HMRC with a UTR number.

    However a long-term client has been in touch, saying that very soon (possibly due to the recent Uber ruling) they will probably only be able to use freelancers who are limited companies, so that they are not seen as employees.

    This client gives me a lot of freelance work per year, but I can never imagine I would be seen as being an employee by the law - it probably averages out only about 3-4 hours a week.

    Has anyone else heard anything similar like this recently?

    I want to avoid going limited if possible because the admin will be a huge pain, and my tenancy agreement forbids me from registering at my home address anyway so I would have to pay for a virtual office address.
    Originally posted by joharm
    We have been in business for 20 years now, and over that period have come across many customers who will only source from other limited companies (not individuals). It does not affect us as we trade through a limited company anyway, but I have known some individuals complain that they cannot supply to some of our customers because they do not benefit from limited liability.

    Ultimately, the customer is king and always dictate who they will source from. On the other hand, us suppliers whether trading with the benefit of limited liability or not, also have the last say on who we will or will not supply to.

    If one of your customers, for whom you only provide services for a maximumn of 4 hours per week, no longer wished to source from you unless you provide those services as a limited company, then unless you set up a limited compaay to provide those very limited services (almost certainly not worth it), simply advise them you will no longer be able to supply them.

    Plenty of customerers out there who won't give two hoots as to your trading style.
    • antrobus
    • By antrobus 14th Nov 17, 4:23 PM
    • 15,275 Posts
    • 21,791 Thanks
    antrobus
    • #3
    • 14th Nov 17, 4:23 PM
    • #3
    • 14th Nov 17, 4:23 PM
    ...

    Has anyone else heard anything similar like this recently?
    Originally posted by joharm
    Recently, no. But companies do often insist on it.

    ...
    I want to avoid going limited if possible because the admin will be a huge pain, and my tenancy agreement forbids me from registering at my home address anyway so I would have to pay for a virtual office address.
    Originally posted by joharm
    Get an accountant. Use their address.
    • FatVonD
    • By FatVonD 14th Nov 17, 9:11 PM
    • 4,951 Posts
    • 19,625 Thanks
    FatVonD
    • #4
    • 14th Nov 17, 9:11 PM
    • #4
    • 14th Nov 17, 9:11 PM
    Could you ask them if they will put you on the payroll?

    Until very recently I was working as a freelance designer (in publishing) and pretty much every publishing house had to pay you via PAYE as you were classed as an employee albeit on a fixed term contract. I recently had to take a two week break in a booking as I'd been there too long and they needed to safeguard themselves against me having claims to becoming permanent.

    Lots of people were up in arms about being taxed at source when it first started and some did set up as limited companies as that was the only way to be paid gross but it's a lot of trouble just for one client. If you are taxed too much you can either offset it against other income or it will be repaid as a rebate.
    Make £5 a day in November £36.28/£150 (October £288.52, September £374.30, August £223.95, July £71.45, June £251.22, May£119.33, April £236.24, March £106.74, Feb £40.99, Jan £98.54)
    • Pennywise
    • By Pennywise 15th Nov 17, 7:49 AM
    • 9,334 Posts
    • 16,962 Thanks
    Pennywise
    • #5
    • 15th Nov 17, 7:49 AM
    • #5
    • 15th Nov 17, 7:49 AM
    Could you ask them if they will put you on the payroll?
    Originally posted by FatVonD
    Have to weigh up the losses against the costs of a limited.

    As an employee, there'd be few, if any, expense claims allowable, so no tax relief on travelling etc. There'd be NIC to pay on the "wages". The employer would be liable for holiday pay, employers NIC, workplace pension, etc so the gross amount would be less than a "self employed" rate.

    For the occasional few hours, maybe OK, but for sizable chunks of work, probably best to bite the bullet and become limited as they'd then save NIC on other work too!
    • trailingspouse
    • By trailingspouse 15th Nov 17, 8:15 AM
    • 2,370 Posts
    • 3,376 Thanks
    trailingspouse
    • #6
    • 15th Nov 17, 8:15 AM
    • #6
    • 15th Nov 17, 8:15 AM
    Ask an accountant to crunch the numbers for you, so you can work out the difference between
    a) being on the payroll
    b) being a sole trader
    c) being a limited company.

    And read up on IR35 to see whether you think you are in breach.

    As to running a business from a rented address - surely as a sole trader you are already doing this?

    We've lived in 6 different rented properties while we ran our limited company, and we never had any trouble with landlords. The clause is there to stop you opening a shop in your front room... It would be worth speaking to the landlord and explaining that you would be doing exactly the same work as you're doing now, just under a different heading. Also reassure them that there will be no-one visiting the premises for business purposes, and you won't be keeping any stock (this would be the same if you owned your own home).
    • NineDeuce
    • By NineDeuce 15th Nov 17, 8:50 AM
    • 437 Posts
    • 388 Thanks
    NineDeuce
    • #7
    • 15th Nov 17, 8:50 AM
    • #7
    • 15th Nov 17, 8:50 AM
    I dont see why the Uber ruling should make it mandatory for your to become limited. This ruling was to prevent Uber from effectively employing people without having the 'burden' of covering an employee's rights such as holiday and sick pay. The Uber taxi drivers are not self-employed in reality as they only work for one company.
    • joharm
    • By joharm 15th Nov 17, 9:10 AM
    • 16 Posts
    • 4 Thanks
    joharm
    • #8
    • 15th Nov 17, 9:10 AM
    • #8
    • 15th Nov 17, 9:10 AM
    Thank you for all your replies! Some great advice here

    I definitely wouldn't want to be on their payroll. I became self employed in the first place to avoid that type of relationship. I don't do fixed term contracts either.

    There's lots of stuff to consider here - me and the company have agreed to leave it for now until the New Year.

    There might be some VAT threshold changes in the budget next week anyway so it might be time soon to get fully registered and get an accountant!

    Thanks all.
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