Becoming Self-Employed - Pros and Cons?

familyguy12

Hi. I'll do my best to set out this scenario...
My OH is in a permanent job on an approx 40k per annum salary. She has requested the opportunity of working remotely with her employer as we are moving
out of London (as my own employer has set up elsewhere)
They have said she can do so but they would only be willing to do so if she works as a contractor / consultant type role - therefore on a self employed basis.
She was advised to speak to a tax advisor to see what is entailed (which we plan to do)
She is worried about having to do her own taxes and paperwork etc going forward having never been in that position before.
I just really wanted to perhaps see if anyone else here might have been in any kind of similar circumstance? 
It's different I assume to running your own business but you are still submitting your own taxes.
If anyone has any general advice on how she should approach this, obviously speaking to a tax advisor is a priority but I just mean in terms of
going about it or anything we should be researching / establishing with her employer before she takes the decision to go down this road.
If anyone can suggest some obvious pros/cons to this I'd be very keen to read your advice or suggestions.
Thank you.

Dazed_and_C0nfused

It's different I assume to running your own business but you are still submitting your own taxes.

She would be running her own business.  That's what self employment is.

Lots of questions spring to mind.  Two to start.

If the job is PAYE why would it become self employment just because she moves house?

How does she feel about losing her holidays, sick pay, pension, etc etc.

familyguy12

Dazed_and_C0nfused said:

How does she feel about losing her holidays, sick pay, pension, etc etc.

The employer is willing to compromise with the above so that's not a concern.

I have since had some advice from someone who was in a similar predicament.

TELLIT01

If she is going to be working full time for a single employer/customer, HMRC may not consider to be self employed.  I know the rules around self employed status in that kind of situation have been tightened up and you/she will need to investigate further.

motorguy

TELLIT01 said:

If she is going to be working full time for a single employer/customer, HMRC may not consider to be self employed.  I know the rules around self employed status in that kind of situation have been tightened up and you/she will need to investigate further.

Its quite simple really.  She would be deemed inside IR35, and thus her simplest solution would be to have her day rate paid to an Umbrella company.  Her day rate would need to factor in :

• Employers National Insurance (about 14%)
• Apprenticeship Levy (about 0.5%)
• Employees National Insurance
• Umbrella company fees
• Approx 1/11th of her day rate set aside for annual leave entitlement.

Some good info relating to Umbrella companies here

https://www.contractoruk.com/directory/umbrella_companies.html

Also good forum attached to that too

https://www.contractoruk.com/forums/

maxmayer

Theris only one good thing in self-employed - all your success depends on you. It's rather an advanrage then a weakness. But if you are lazy and don't wanna be responsible for your own work, result and all the process - it's not for you.

Potbellypig

motorguy said:

TELLIT01 said:

If she is going to be working full time for a single employer/customer, HMRC may not consider to be self employed.  I know the rules around self employed status in that kind of situation have been tightened up and you/she will need to investigate further.

Its quite simple really.  She would be deemed inside IR35, and thus her simplest solution would be to have her day rate paid to an Umbrella company.  Her day rate would need to factor in :

• Employers National Insurance (about 14%)
• Apprenticeship Levy (about 0.5%)
• Employees National Insurance
• Umbrella company fees
• Approx 1/11th of her day rate set aside for annual leave entitlement.

Some good info relating to Umbrella companies here

https://www.contractoruk.com/directory/umbrella_companies.html

Also good forum attached to that too

https://www.contractoruk.com/forums/

Or she could be deemed outside IR35 and get set up as a Ltd company. 

motorguy

Potbellypig said:

motorguy said:

TELLIT01 said:

If she is going to be working full time for a single employer/customer, HMRC may not consider to be self employed.  I know the rules around self employed status in that kind of situation have been tightened up and you/she will need to investigate further.

Its quite simple really.  She would be deemed inside IR35, and thus her simplest solution would be to have her day rate paid to an Umbrella company.  Her day rate would need to factor in :

• Employers National Insurance (about 14%)
• Apprenticeship Levy (about 0.5%)
• Employees National Insurance
• Umbrella company fees
• Approx 1/11th of her day rate set aside for annual leave entitlement.

Some good info relating to Umbrella companies here

https://www.contractoruk.com/directory/umbrella_companies.html

Also good forum attached to that too

https://www.contractoruk.com/forums/

Or she could be deemed outside IR35 and get set up as a Ltd company. 

If shes covering her own previous permanent substantive role, theres not a chance its outside IR35.

I cant think of a better example of a role being INSIDE IR35 actually.