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Registering as self-employed - talk me through it

Epona

Radar 2006-2020, Sonic 2006-2022, Jakey 2007-2024
So - in a slightly surreal change of pace for me, it turns out that I am really quite good at painting and decorating, I completed a C&G course today for entry level 3 for the trade, and there is a possibility that I might have a day of work next week (helping out on trainee pay to get some experience and on the job tuition - and probably doing a lot of sanding).

If it all comes to fruition as planned, I need to register as self-employed with the HMRC as I'll be a contractor rather than an employee. I am not too scared about doing tax self-assessment as most of my 20 years as a desk jockey involved finances and book-keeping/accounting in some shape or form, I (at least mostly) know the rules about deductions etc.

Talk to me about being self-employed, and the registration process.

How difficult it is to go back to PAYE in the event of getting employment rather than being a contractor?
 
Its a simple as phoning up and asking for a UTR number.

There is no switching back and forth either. Some work I do as a freelancer, other work I do on PAYE.
 
Its a simple as phoning up and asking for a UTR number.

There is no switching back and forth either. Some work I do as a freelancer, other work I do on PAYE.

Fantastic, I was worried that might be complex. Honestly the HMRC send my husband a letter every other day about his tax code, and he is supposedly on PAYE - but doing agency work on like half the salary he used to get, and they are finding it difficult to calculate repayment of an underpayment (because his employer at the time fucked up) in the previous tax year - no joke, he has had 3 letters from them in the last 7 days, each saying something different.

I mean clearly dealing with the red tape can be a bit fraught sometimes, but it won't come as a surprise, if that makes any sense!
 
all fairly simple, or at least it was a few years ago when i did it

my self employment was not a great success and earnings that way were small enough for them not to want to see records, but hope yours is a bit more so.

yes they will probably want to see records. bear in mind (if this is not stating the obvious) you should be paying income tax on net earnings, not turnover, so think about what's a legit business expense (materials, travel, probably something towards stationery / computer for record keeping and doing invoices and so on - I never really got in to that league) - and records of these will need keeping as well. Not sure if training costs might be deductible.

you can get a UTR number and set it all up online without needing to phone via 'government gateway' here

and not a problem to combine PAYE work with self employed work - although if self employment is your main job, then you'd probably pay basic rate on any PAYE earnings and have to sort it all out with tax return.

i'm a bit fuzzy about self employment and national insurance contributions - depending on circumstances, you may want to investigate this further, as it may have implications on your state pension entitlement and future eligibility for some DWP benefits.
 
all fairly simple, or at least it was a few years ago when i did it

my self employment was not a great success and earnings that way were small enough for them not to want to see records, but hope yours is a bit more so.

yes they will probably want to see records. bear in mind (if this is not stating the obvious) you should be paying income tax on net earnings, not turnover, so think about what's a legit business expense (materials, travel, probably something towards stationery / computer for record keeping and doing invoices and so on - I never really got in to that league) - and records of these will need keeping as well. Not sure if training costs might be deductible.

you can get a UTR number and set it all up online without needing to phone via 'government gateway' here

and not a problem to combine PAYE work with self employed work - although if self employment is your main job, then you'd probably pay basic rate on any PAYE earnings and have to sort it all out with tax return.

i'm a bit fuzzy about self employment and national insurance contributions - depending on circumstances, you may want to investigate this further, as it may have implications on your state pension entitlement and future eligibility for some DWP benefits.

Thanks, yeah I will need to make NIC payments for myself, I'll double check what that involves too.

And yes it will start out slow while I build up my skills and experience (and see whether I can cope physically with that sort of work regularly - as it stands I feel surprisingly fulfilled and not achy after 2 days volunteering), I may not earn enough this year to go over the tax threshold - but it is all stuff that I need to be aware of just in case.
 
also may be worth bearing in mind that (unless things have changed a lot) you can claim income related benefits if you're self employed, although not quite sure what hoops you have to jump through to prove income. i think you've mentioned elsewhere being owner-occupier rather than renting so housing benefit's not a thing in your case, but council tax benefit (or whatever it's called this week) may be - it's not an 'all or nothing' thing.

although proving income in the case of being self employed and with a partner who's on variable hours / income must be a bit painful, but when i did housing benefits we could cope with both, and would take an average of the last X weeks or months (I can't remember the detail now)

all of the above comes with the disclaimer that it's a long time now since i did housing benefits work. and my knowledge of working tax credits (which again as far as i recall can be claimed if you're self employed) is really very fuzzy. and the whole lot is moving towards universal credit which is worse, and you may get hassled to get more / better paid work.
 
also may be worth bearing in mind that (unless things have changed a lot) you can claim income related benefits if you're self employed, although not quite sure what hoops you have to jump through to prove income. i think you've mentioned elsewhere being owner-occupier rather than renting so housing benefit's not a thing in your case, but council tax benefit (or whatever it's called this week) may be - it's not an 'all or nothing' thing.

although proving income in the case of being self employed and with a partner who's on variable hours / income must be a bit painful, but when i did housing benefits we could cope with both, and would take an average of the last X weeks or months (I can't remember the detail now)

all of the above comes with the disclaimer that it's a long time now since i did housing benefits work. and my knowledge of working tax credits (which again as far as i recall can be claimed if you're self employed) is really very fuzzy. and the whole lot is moving towards universal credit which is worse, and you may get hassled to get more / better paid work.

Thanks, our UC claim was cancelled without us ever receiving a payment as Nate did more than 16 hours work in the few days before the first month of our claim was up - so we lost pretty much 5 weeks of benefits (when we had no income from other sources) - but are NOT currently claiming and we are over the threshold even though only 1 of us is working - when he has a full week of work he's getting around £400-£500 a week which is less than we are used to (he used to regularly bring home £600-£700 a week, but was paid monthly), but that is clearly too much to start whining at the government about benefits :D It would be a king's bounty to some, I know. The issue is that as he is working through an agency, he gets 0 hours some weeks and 60 another, so it is uneven - it's more like £0, £200, £500, 450 week in week out.

I would of course be in the same boat being self-employed - but since I haven't had an actual salary in 10 years, enjoy doing this, seem to be physically capable of it, and have an opportunity to get in some training on a low pay rate - I really think I should give it a go.
 
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Thanks, our UC claim was cancelled without us ever receiving a payment as Nate did more than 16 hours work in the few days before the first month of our claim was up

:facepalm: (at them that is)

you can be in a position where you're working too many hours to get benefits for not working, but not enough hours to get working tax credits. the whole bloody system is crackers.

the original theory for UC was that it would react better to variable earnings but it's turned in to a massive bloody shambles.

may be worth having a play with the turn2us benefits calculator (it will ask for real numbers for wages etc, but it's anonymous and not linked to DWP or councils)
 
Hehe... as a result of doing the training, I found out about a similar carpentry course next week and got signed up to that :D
 
i'm a bit fuzzy about self employment and national insurance contributions - depending on circumstances, you may want to investigate this further, as it may have implications on your state pension entitlement and future eligibility for some DWP benefits.

Used to be you had to apply for an exemption from class 2 NI contributions if you were self employed and earning less than x per year, now they exempt you automatically when you file your tax return but you can pay a voluntary contribution if you wish.

E2a: with state pension age going up to 89 in a minute, I wouldn't bother with the voluntary NI payment if I were you.
 
Used to be you had to apply for an exemption from class 2 NI contributions if you were self employed and earning less than x per year, now they exempt you automatically when you file your tax return but you can pay a voluntary contribution if you wish.

E2a: with state pension age going up to 89 in a minute, I wouldn't bother with the voluntary NI payment if I were you.

It's only £2.80 per week, not counting any weeks where you don't get any work. It makes you eligible for contributions-based ESA, if you stop being able to work due to disability, which is helpful if you have a partner who works.
 
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