Going Freelance for the first time..

[Yorkie]

NI is nothing to be scared of. Bill for £32 once a quarter and that's it. (generally speaking, there is another class of NI and I'm not sure when that applies). I've set up as self employed in the last year and the business link and HMRC websites have been very useful so far. I haven't yet had to do a tax return though

[mrcog]

Cheers for that Yorkie. Yeah it's not something I was afraid off, just if I didn't need to pay it as I was paying it through my employed jobs then why pay extra?

 

I also have just done the Employment Status Indicator on the HMRC website and it says that I should be registered as self-employed as I thought. Now to read the HSWA...

 

James

[Jivemaster]

Not meant to cause offence but very deep thought, at which it was successful. Consider going to an insurer saying I've never done this and I need insurance for when I do it for my work, or I have nnyears experience of this and training courses 1,2,3 and 4 and please will you insure me.

 

Remember that everything is your problem as a self employed person. Also it's a rare employer that is late paying wages (of the PAYE sort). BUT true and established freelancers are finding invoices paid after 30 days or 60 or 90 days in the mean time you must pay to work and pay to live. You are responsible for your own debt chasing too, and you have to chase carefully cos they are your work provider too. You can assume that PAYE wages will come in on time, and also it's reasonable to expect freelance invoices paid between 3 and 6 MONTHS (which isn't the point of going to work really). With freelancing you are responsible for your own working time compliance, and if you want to take a holiday you will lose money.

[Takeiteasy]

When invoicing try to make your payment terms no longer than 7 days ( payment up front is always best via bank transfer ) as you WILL be messed around at some point for sure

[Junior8]

I also have just done the Employment Status Indicator on the HMRC website and it says that I should be registered as self-employed as I thought. Now to read the HSWA...

James

 

I recommend this to anybody in the same boat as HMRC has confirmed that they will abide by the result of this tool should there be any debate later on.

[Pete McCrea]

7 Day terms is all well and good. But it doesn't mean that the money will appear in 7 days... We're still owed for a gig in mid September, where the terms were 7 days after completion of the event for the remaining 50%. That's with the court/Bailiff now. And it's for a reasonable 4 figure sum.

 

Your profile states that your 18. Now in the eyes of real world employers you've only really just entered the world of being able to be a Self Employed Sub Contractor (SECS?). If you sent me your CV, I'd assume that your green behind the ears, and would need to be watched pretty closely on site, until I'd got the measure of you after a few gigs. And you'd only really be booked as a crew person by virtue of this. There is also a bit if a difference between a casual Tech in one venue and what I would class as a fully experienced SECS. That comes with time and experience.

 

If you came to me and said Pete I'm a SESC and want to learn more please use me, then we'd look at it. There is something I like about being able to help foster and encourage the younger generation to come through, as ultimately you'll be the ones booking kit from us in a few years time. And you do seem to be approaching it in the best way, so all credit due to you. Hopefully this thread will be a useful resource for those who follow after you.

[smalljoshua]

Hopefully this thread will be a useful resource for those who follow after you.

This certainly is a very useful thread, the tool on the HMRC website has also confirmed what I thought initially that I should be self-employed.

 

Cheers

 

Josh

[kerry davies]

http://www.adviceguide.org.uk/index/life/employment/contracts_of_employment.htm#are_you_an_employee_or_self_employed

is the CAB guidance on employment status and includes the phrase; "If your employer is responsible for supplying main tools and machinery and materials, with you responsible for supplying only a few of your own tools, you are likely to be an employee." This is known as a "strong" indicator.

 

This is also the clause that stopped the freelance trucking side of the entertainment industry, no truck, you're employed. It cost a few firms a few bob so if Pete supplies a screen does that count?

 

Pete is probably best placed as an employer to check with his advisers on the upcoming April/May changes to the new penalty regime and moves to reduce self-employment. Accountancy Age and some lawyers websites have bits of info but not being a legal eagle I don't quite follow them. They do all say that 2011 will see changes which need to be dealt with. They also say that the legal duty to prove employment status now rests with the employer not the employee, which is interesting.

I don't know I just read it, best get a lawyer to advise.

 

PS the HMRC tool is an indicator and not a guaranteed decision maker and it would be fascinating to know if HMRC still accepts the self-employeds own filling in of the tool to be binding.

[themadhippy]

"If your employer is responsible for supplying main tools and machinery and materials, with you responsible for supplying only a few of your own tools, you are likely to be an employee." This is known as a "strong" indicator.

ok,but how does that fit in with our industry,we dont all turn up at the job ,each with our own lighting/sound /truss rig,in the norm the main contractors provides the equipment and hires in the labour in to install and operate it.

[Junior8]

You need to realize why free-lancing became the norm in many areas. It saves the employers money - most especially Class 1 Employers NI contributions but not just that. The recent rafts of employment law have also made employing labour very onerous legally - which is why many enterprises only use agency staff. As far as the on-line tool is concerned I was assured that HMRC will abide by it - but you have to fill it in honestly and as Kerry points out it could all change. As far as the Tax/NI situation is concerned HMRC's only aim is to collect the tax it feels is due and to prevent avoidance. Kerry is right about it being the employer's responsibility to engage staff on the correct basis and I think HMRC will increasingly be checking up on that. But if they do find the employer at fault they won't come after you. Oh and by the way don't think that self-employment is a way to reduce NI substantially because once your earnings go above the personal allowance you also have to pay Class 4 NI at I think 8% at the same time as you pay your tax.

[kerry davies]

Hippy, that is why I asked Pete to ask an expert. Farm labourers are employed through PAYE to get the crop in until they own the combines and become agricultural contractors on a self employed basis. HMRC were thinking about making concert pianists employees because they can't find any who carry a Steinway around with them. It is that curious.

 

The indicators are "strong" or "weak" which ultimately leaves all decisions up to them, that's indicators not parameters or anything decisive.

 

Junior is mostly right in that they concentrate on "employers" BUT in 2009 when they went after IT consultants using agencies to reduce tax, they found one high-flying guy who worked for the same company for three years exclusively. He had to pay £99,000 in back tax and penalty.

 

I think that governments left it deliberately vague for what used to be a few of their supporters. Nobody ever thought that half the country would up and leave the dark satanics and set up en masse as self employed workers. It doesn't suit any more.

 

Just like on PASMA, WaH, MEWPS, Drugs, and a hundred other things I got away with in the business you guys can't. There's just too many of you in a multi-billion pound industry. We may get away with it for some time yet, but heaven help the ones they make examples of. Read this; http://www.independent.co.uk/money/tax/nine-million-people-face-tougher-tax-penalties-2179087.html

[David Lee]

I have been self employed for ages. IMHO I would rather be classed as a casual and let somebody else deal with the tax etc. Let me get on with doing what I enjoy doing.

[Jivemaster]

Years ago, an accountant told me that having one major work provider was a near certain indicator of PAYEable employment unless there was a stronger indicator of self employed contractor status. ON these grounds you need three significant work providers probably none exceeding 25% of your turnover and several others making up the rest of your business.

 

Anyway, unless you have really good reason you want to be an employee. largely because your wages should arrive in the bank on the correct day each month, All your training needs are your employer's responsibility, all your PPE likewise is their problem. If you could be on big sites you may have to work under the CDM regulations which you do NOT understand very few people do. As an employee your employer has to do the noise at work calculations, as a contractor YOU have to do them and you don't understand that yet either.

[dbuckley]

In part, this question is about IR35.

 

A recent judgement has just upset the applecart by disagreeing with the Inland Revenue and striking down their assessment of someone being an employee.

 

Its a complex area.

[J Pearce]

It strikes me that if many of our freelancers were PAYE with every company they worked for, including that company you did one gig for and swore never to go near again, the tax office would actually have a far harder time, and how would one set an appropriate tax code to ensure correct payment of tax?

 

I am not a full time freelancer, but I am registered as self employed, because like many here I do the occasional event outside of my main employment (not just tech, also as an orchestral percussionist). Some of these are commercial events, for which I charge industry rates and some are smaller community events where my self employed status just means being upfront about what the event cost me and what they reimbursed me with.

 

Take for instance an orchestra I regularly work with. Last tax year they accounted for around 40% of my self employed income. They pay me travel plus a notional wear and tear on my equipment and around £50 more for my time.

There is no way as an amateur society they could justify taking on PAYE employees, it would just be too much and they simply wouldn't bother having extra players. Under IR35 should I be PAYE?

 

The adhoc nature of the events (and music) industry doesn't easily lend itself to a PAYE arrangement, with many people coming and going at little notice. Between the payroll company and HMRC it took a year to get my tax code right at my main employment, could HMRC really keep up with all of us being PAYE at every company we have, do, and may work for?