New Self Employed in UK
I'm in the process of changing job, I will move to a company that hires people as self-employed.
I created my account with HMRC and I'm waiting for my URT (UTR?)
Despite me be self-employed I will be working 40/h week for the same company, I do have the possibility to work for other employers but it isn't likely to happen in the short term.
With this said my "business" should have any expenses beside taxes and refunds claim.
Is anyone in a similar position? do you have advice or warning?
I'm looking to create a new bank account so that I can keep the business stuff separated from my personal one.
According to HMRC Calculator, the only cost should be tax (around 15%) do you know if there are hidden things to add?
Thanks all for any information you may have
You're working for a single company 40 hours/week and they consider you as self-employed? That's surprising given HMRC guidance. I'd check that any risk of that decision being wrong is on the company and not on yourself. There's been a few cases challenging this recently which I admit to not having followed too closely (Uber being one - https://www.makeuk.org/news-and-events/news/supreme-court-concludes-uber-drivers-are-workers-not-self-employed).
Assuming you are self-employed, then the key information is here:
I would agree to get a separate bank account and I would also manage that in a separate YNAB budget. That way you can't get messed up or allocate business money to personal categories and vice versa. I would immediately set up categories for you class 2 and class 4 NICs contributions, VAT (if relevant) and income tax, create goals for these and set aside money from each payment now so that you have the money ready when it's due.
ETA: if the HMRC calculator gave overall tax at 15% then VAT is unlikely to be relevant. The 15% must be taking into account the personal tax allowance. Personally, I'd prefer to just put 20% into the income tax category and have a bit left over after paying the bill. Your NICs payments may be on top of that 15%. Again this depends on how much you are earning. Be aware that you will likely need to make payments on account re income tax and once you get going they are estimated based on the previous year's figures. You can request them to change that if you anticipate things being significantly different. The other thing to read up on is which expenses are allowable and which aren't (https://www.gov.uk/expenses-if-youre-self-employed).
Thanks for your answer.
I'll look at the link you gave me.
To be fair to the company they offered me the possibility of either go PAYE or self-employed. Looking at the taxes calculator with the payment they proposed to me (not even 30K/y) it looked like I will be able to gain a few hundred quid more a month if I go as self-employed. This even without considering tax return.
Another reason why 40h/w seemed reasonable is that the business operates 7 days a week, so those 40 hours can take many shapes, giving me the possibility to do the odd job for other businesses if I so decide.
From my ignorant point of view, this made sense and look like it was a good way to gain more at the end of the year.
If you think I'm wrong or I missed something please let me know.
Some quick thoughts although I can't answer the main one as I'm working all weekend on a crisis project so finding a decent google link would be me procrastinating.
- If you're self-employed the taxes are different but you have no employment rights so no paid holiday, sick pay, right to minimum wage, etc.
- Sometimes whether you are self-employed or employed isn't a matter of choice for you or the company - there are tests based on the reality of the situation. To be fair it's the company that's at risk if this is assessed incorrectly. 40 hours a week would be one pointer towards employment (24 hour nature or shift patterns wouldn't affect this) but there are many other factors and as I said, I'm pretty sure it's their issue not yours.
- Being employed or self-employed on this 'job' doesn't impact on your potential to do the same work for other employers or customers.