Possible self-employment.

YoungBlueEyes

Good morning all. 

If someone has been given the opportunity to continue in their job but as a self-employed person, what aspects should be considered? 

Things like tax, NI, and poss the mortgage lender? Is there anything else to consider?

I've tried DuckDucking but there are so many websites out there and I really don't know what I'm looking at. 

Any help gratefully received. 

BoGoF

Main thing to consider is that is the 'employer' trying to take advantage of you?

What has changed in your working conditions/relationship that would mean the work you were doing on an employed basis should now be self-employed? If none, then there is only one real winner in this and it's not you. Loss of holiday pay/sick pay being a couple of obvious ones.

YoungBlueEyes

Thanks for your quick reply.

It's not for me, it's for my partner. In brief - the company he works for is being bought out and might be making some redundancies soon. One of his managers said he might set up his own business and take some of the lads with him if they wanted to follow him but it would be on a self-employed basis. I'm trying to do some research around the differences of being SE. I think he might be better taking the redundancy money and moving to another company (easily done, he's in modular building) but I'd rather have some facts and links to show him the pros and cons.

jlfrs01

YoungBlueEyes said:

 I think he might be better taking the redundancy money and moving to another company (easily done, he's in modular building) but I'd rather have some facts and links to show him the pros and cons.

I've done this myself. In this scenario, I think it likely the OP's Partner will take the redundancy and then contract back to his former employer. The minuses are as follows:

1: No workplace pension
2: No sick or holiday pay
3: No protection under employment law after 2 years
4: He'll have to organise his own tax affairs including NI contributions
5: No pay rises
6: No notice period (unless the client will agree to a contract)
7: Depending on the sort of work, investment in "tools of the trade" may be required such as mobile phones, laptops, software, etc.
8: If it's the sort of job where expenses can be claimed such as business miles, these can still be claimed but only from yourself, not an employer (unless they agree it).

On the plus side, it could be possible to combine multiple contracts to work for multiple clients which can be lucrative and pave the way to form a limited company which does have personal tax benefits. Some folk like the flexibility of being their own boss (I do) but it doesn't suit everyone, particularly if they need the reassurance of a regular salary and the discipline and structure of being employed.

YoungBlueEyes

Thanks jlfrs01, food for thought there. 

This is all hypothetical for now, his manager only mentioned it yesterday as an idea to see who might follow him. I don't think being se would suit tbh, I think he'd be happier moving to another company and having the stability of that, rather than (possibly) going with his manager. I don't know.

I've been reading the gov website about self employed contractors, are there any others worth reading...?  

Marcon

YoungBlueEyes said:

Thanks for your quick reply.

It's not for me, it's for my partner. In brief - the company he works for is being bought out and might be making some redundancies soon. One of his managers said he might set up his own business and take some of the lads with him if they wanted to follow him but it would be on a self-employed basis. I'm trying to do some research around the differences of being SE. I think he might be better taking the redundancy money and moving to another company (easily done, he's in modular building) but I'd rather have some facts and links to show him the pros and cons.

If he'd qualify for redundancy if he's one of the people made redundant, perhaps waiting to see what happens on that front, and then deciding on his next move, could be the best option for him.

The rather nebulous 'offer' from his manager isn't worth anything at this stage and there could also be significant issues if the manager pursued this course of action (eg if there are restrictive covenants in his contract with the current employer). There may also be a separate issue with HRMC's take on whether your partner would indeed be 'self employed' - he could be classed as something called a 'worker', which would give him many of the benefits of being an employee. That won't be the manager's call - a penny which might not yet have dropped.

There's some very helpful info here: https://www.litrg.org.uk/tax-guides/self-employment 

YoungBlueEyes

That's brilliant, thank you Marcon. I hadn't even considered that his manager's contract might scupper the whole notion. 

jlfrs01

One thing which might be a fly in the ointment to your Partner's Manager's plan are the IR35 rules, based on the info in your original post, these would almost certainly apply. I would highly recommend your Partner read up on these because it would be hugely off-putting for the company.
You don't say if your Partner has been employed for more than 2 years, if so then he will have employment rights and there's nothing to say he wouldn't be TUPE'd over to the new company. If not, then he'd probably get a severance package. 

YoungBlueEyes

He's been there about 5 years now. 

I'll look up IR35 and TUPE and get some pages bookmarked ready for him to read. 

YoungBlueEyes

Just spotted your edit Marcon - I’ll add HMRC to the reading list. 

Marcon

YoungBlueEyes said:

Just spotted your edit Marcon - I’ll add HMRC to the reading list. 

You might also flag the possibility that this could be a partnership (with limited liability)...that would give further food for thought. https://www.gov.uk/set-up-business-partnership