Will it benefit me to go Self Employed?

Gasket

Hi I wonder if you can help me.

I am currently employed as a Firefighter earning approx £28K per year, which is paid monthly on a PAYE basis.

I also have a second job, part time in an insurance office where I earn between £8 - £10K per year this is also dealt with on a PAYE basis and my tax code is BR.

My query is whether i would be of benefit to go self employed and invoice my employer each month. I am not sure if this would open up any tax benefits for me.

Your advice is appreciated.

Pennywise

You don't have a choice of employment or self employment. Your status is determined by the manner in which you carry out your work and relationship with your "employer". There are plenty of other threads that you could search for which give the details and the employment status indicator is also available on HMRC's website. Basically, if your "employer" controls what you do, you use their equipment and get paid by the hour, then you're probably an employee and can do little about it. Conversely, if you are relatively free to organise the work you do, free to give some of the work to others to do for you, use your own equipment and get paid by "task", you are probably self employed. Whether you are better off self employed depends on your circumstances - you can claim more expenses (if you incur them for business) but you have to offset the loss of employment rights, such as holiday pay, sick pay, state benefits, etc.

Gasket

Thanks,
I believe I fall into your SElf employment as i now use my own lap top etc, my employers are happy for me to be self employed and sub contracted.

What expenses can i claim for and how can i calculate what can be deducted from my tax bill, I really am in the dark here

dunstonh

The financial services industry seems to have avoided the self employed/employed issues that have hit other professions. In that you can be attached to a firm exclusively but be self employed.

So, if the employer allows it and you want it then there is no reason for it not to happen. "Employers" (and I am one myself although not in the technical sense) prefer self employed as there is less liability. Your contract can be terminated, if it goes quiet they dont have to pay you etc and it costs less on administration and makes it easier on NI.

tyllwyd

Do you do all your work in the company's office, or do you work at home or visit clients using your car etc? I don't really know anything about it, but if you only work in someone else's office, unless you pay a share of the bills, I can't think of what you would claim as expenses apart from a bit of stationery and maybe the cost of your laptop. Or am I missing something?

Gasket

I mainly work in the office, but do work on occassion from home. The problem i have is iam getting a lot of "Pub Talk" advice from people who are telling me i can claim for all sorts , phone bills, clothing, heating etc. I dont know how much is true and what sort of amounts would eligible.

dunstonh

The problem i have is iam getting a lot of "Pub Talk" advice from people who are telling me i can claim for all sorts , phone bills, clothing, heating etc.

You cannot claim clothing. There is nothing hazardous in financial services that requires specialised clothing.

Heating can be covered if you worked from home to an extent (if you have 6 rooms then you can claim 1/6th of your heating bill). Business phone calls can be claimed but you work in an office so who are you going to be phoning from home?

There is little benefit to you being self employed to be honest. Almost certainly more for you to lose.

ks62uk

There is a guide to tax deductible expenses at
http://tips.hrbs.biz/running-your-business/tax-deductible-expenses/ .
HMRC have examples of claiming for using your home as an office at
http://www.hmrc.gov.uk/manuals/bimmanual/BIM47825.htm .
If you do decide to go self employed make sure you register with HMRC within 3 months otherwise you will be fined £100. You will also need to pay the fixed class 2 NIC (http://www.hmrc.gov.uk/rates/nic.htm)

chriiiiiiiis

Gasket wrote: »

...my employers are happy for me to be self employed and sub contracted...

They would be happy. It's cheaper for them.

More hassle for you.

As stated above, employment status is not a matter of choice. You can't just decide what you want to be.

tyllwyd

If you are self-employed and work from home you could claim a bit of your heating bill against tax - but then again, you will probably have the heating on more than if you were in the office, so I can't see you'd gain much. Same with phone calls - if you make business phone calls from home, surely you could claim those as expenses from your employer anyway.

I thought that if you work from home when you are employed, you could claim back something like £2 per week tax relief for the cost of running a home office. That might be worth looking into.
http://www.hmrc.gov.uk/incometax/relief-household.htm

Debt_Free_Chick

Gasket wrote: »

I mainly work in the office, but do work on occassion from home. The problem i have is iam getting a lot of "Pub Talk" advice from people who are telling me i can claim for all sorts , phone bills, clothing, heating etc. I dont know how much is true and what sort of amounts would eligible.

You can only claim for certain expenses and then only for those that are purely for business purposes.

Think of it this way ..... at the moment, you don't have to pay the cost of business phone calls as your employer pays for those. If you went self employed, whilst you could deduct the calls as a business expense, you also have to find the money to pay for them first!! You would actually be worse off!