Hello I was wondering whether a freelancer (working 2 different jobs) who chooses to register self employed would increase their tax liability. If the self employment route is chosen and the employer still continues to pay the tax and NI, would the self employed still have to pay class 4 NI individually. Since the self employed can voluntarily become VAT registered would they then have to invoice the employer for work done, to show the VAT or can the employer continue to pay them in the same way. Thanks
1) You should seek to establish if you can be regarded as self-employed. 2) The tax liability should be less as you can claim expenses against the income. 3) If you go self-employed you invoice the "client" and they pay your fees gross.You are responsible for paying tax and Class 4 NIC's. 4) If you register for VAT you bill in the same way as above but with output vat added on top.
Thanks Pete, but do some self employed still get paid by the client i.e PAYE or is it compulsory they invoice the client? Also would class 2 NI be payable as well.
No R1 if you are employed then the employer deducts paye tax & nic. If you are self-employed then the client pays gross without deducting tax- the main exception being sub-contractors in the building industry where the contractor deducts 20% tax but the sub-contractors are still regarded as self-employed. You normally issue an invoice if you are self-employed as the client will want documentary proof for various reasons. Class 2 nic is also payable at £2.30 per week unless you earn less than £4,825 per annum and apply for an exemption certificate.
we all are trying to find New Jobs to get self employed. but freelance is a good way to make money at home.
Freelancing job is now consider as one of the most easiest way to help you earn instant cash and there are also few job site that offer different freelance jobs especially those related in web marketing.
freelancing a really a nice thing for a person don't want to work under anyone and whom also who don't have that much luck to prove themself. we can earn too much from it. Nancy
You cannot just decide whether you are self-employed or employed, it is decided on the facts on each individual case. You could become self-employed but you may have to change you current working arrangements. You should then get a contract in place to reflect these arrangements. I cannot stress enough the dangers of getting this wrong especially given the recent decision in the Autoclenz Limited v Bellcher case. If the employer is going to continue to pay your tax and NI then you are clearly employed. A self employed person is responsible for his own tax and NI liabilities! A self employed would have to invoice the contractor for work done, whether VAT registered or not. You should not be paid the same way as an employee because the self employed person should exhibit a financial risk (i.e. of not being paid on time).
Help from HMRC.... Have a look at: HM Revenue & Customs: Starting up in Business If you are self-employed you don't have an employer. If an employer is paying NI and PAYE for you, you are an employee. Freelancers are normally self-employed (or aspire to be!), but as someone else has already pointed out, you need to make sure you get your status right in the eyes of HMRC. If you voluntarily register for VAT, you need to charge your clients VAT. If you deal primarily with individuals or very small businesses who are not themselves VAT registered, this could represent a 20% increase in costs for them, so think before you voluntarily register. There's plenty of info on all this on HMRC's website. Also very helpful stuff on Business support, information and advice | Business Link.