Registering as Freelance...

[maxjones2000]

Hi All,

This has probably already been covered, but I thought I'd ask it just in case anything's changed!

 

Basically, the theatre where I volunteer has suggested that I register as self-employed/freelance (and get PLI) so that I can start getting paid for doing shows there as a casual technician now that I'm 18.

 

However, I haven't got a clue what I'm doing! I've looked on the HMRC website and on 'freelance uk' which kind of outline what I have to do, but I'm still not sure.

 

I've got to here, but I just wanted to check that this is definitely the right one? I'm only going to be freelance 'on the side' as well as a normal 9-5 job, and I don't want to sign up for the wrong thing (i.e. purely self employed!)!

 

Also, I've read a thing about applying for 'exception from liability for class 2 contributions (CF10)', and this seems a good idea as my freelance earnings will more-than-likely be nowhere near £5,995 over the tax year. Should I apply for that too?

 

Sorry to ask such vague questions, but I really don't understand any of this so go easy on me!

Also, if anyone has any tips or anything, I'd be interested to know please!

 

Cheers,

Max

 

Oh, as a sidenote, do you need an accountant for doing some freelance work? My parents accountant seems to think you do, but I honestly don't think that sounds right...why would I employ an accountant when I'm only going to earn a few hundred pounds a year as a freelancer?! http://www.blue-room.org.uk/public/style_emoticons/default/blink.gif

[paulears]

You can phone them up and have a chat and they'll sort it very easily and give you the mystical number you need. It doesn't even interfere with your other work that could be PAYE'd. However, in this case, the venue are probably going to fall foul of HMRC anyway - because it's perfectly possible HMRC will see this as a method avoiding employers National Insurance contributions and holiday pay requirements. So they're pulling a fast one really. Already some venues are finding out that despite people's self-employed status, they are still having to pay Class 1 employers and employees NI, but not the tax. It's odd in that HMRC will consider some people as self-employed for tax purposes, but employed for NI purposes. An acting ASM can now be considered as a performer, and fall into the trap, while some other businesses have stopped treating casuals as 'not their problem' and started deducting Tax and NI. My own venue - useless at many things has no problems taking somebody on as a proper employee for just a few shows then never seeing them again. It sounds like a 'cunning plan' - so beware. PLI and the pain of doing accounts are a nuisance if you won't earn much.

 

You don't NEED an accountant of you know about what you can claim as allowances, expenses and calculate your own profit and loss at a standard HMRC will accept. It's a case of sticking it into your annual return - some people are good at these, others not.

 

Being self-employed, and paying Class 2 and Class 4 NI and then having extra deductions made from your invoice amount for Class 1 contributions is not good - and you can't get them back!

[Junior8]

If you have a tax enquiry office near you there is a booklet which explains everything and a form you have to send off declaring that you are self-employed. Most of the links you need are on this page and the forms you need are here too also clicking on other tasks opens up the relevant businesslink pages. However I would back up what PE says as it is highly likely that if you only work for this customer, and moreover were doing work that was essential to the core activities of the employer, HMRC could well decide you weren't self-employed and insist the venue puts you on their books for PAYE. (When I was treasurer of a small information service we were advised to do this if we had any doubt about the status of a worker). If you have more than one customer this become less of a problem. If you are paying NI contributions on a salaried job at the same time then it may well be worth applying for the low earnings exemption form Class 2 but check with HMRC first as you do not want any gaps in your contribution record. Check on the isurance postion too - if you are self-employed PLI is not the only cover you need IMHO. Also check your motor insurance too - you may need business cover for some purposes.

 

 

[Jivemaster]

1/ it's a good plan to have an accountant -they are people who LIKE doing figures all day! Most of us would admit that book keeping is tedious.

 

2/ It's not appropriate to be self employed as uniquely supplying yourself to one company, HMRC WILL catch you both out.

 

3/ In my personal opinion you are not fit to be truly self employed until you have five years of relevant work experience. During which you need to become skilled and safe with all the usual features of the job.

 

Telling you to be self employed is the work provider shirking their responsibility for your employment -Employer's liability insurance, Holiday pay, etc etc. With no experience you are in reality uninsurable for PLI etc.

[kerry davies]

Max, pay heed to what Paul writes. The employer is responsible for employees tax status and "suggesting" you become self-employed when you only work as a casual for them alone smacks of lack of knowledge or tax evasion.

 

Just for you, it probably is not right to become a self-employed contractor but if at some point you do then Business-Link has lots of start-up information and often free courses. HMRC really are most helpful, they want the big fish and do not want minnows like us screwing up the works.

 

Accountants, wonderful though they are, can only save money after you have earned enough.

 

NI contributions become important when you do not make enough of them 9 to 5. Then exemption becomes risky as it does not give entitlement to benefits and pensions. If your full-time employment is enough to cover full contributions then seek exemption.

[paulears]

My son has been registered as self-employed for two years now and is only 21, and my accountant does his tax return for him and looks after the receipts - and saves him a lot of money, when he buys specific work clothing, safety wear and equipment, tools and of course travelling and subsistence. My accountant has always saved me more than he costs.About half my son's work is PAYE'd and HMRC just treat him as 'two people'. I really don't see what a specific time working has to do with it whatsoever. Experience and genuine self-employment have nothing to do with each other. We can be skilled PAYE and hopeless as a sole trader, or vice versa - the only difference is that as a self-employed person, you're only as good as the last job!

[Jivemaster]

Before committing yourself to "self Employment" remember that you will have no experience and will be totally liable for all jobs you do. You will also be responsible for the costs of all training that you need, courses etc, and your own PPE and risk assessments. To be self employed you need enough skill and experience to do RAs and work safely. Sadly at 18 years several people don't have that skill and experience.

[gareth]

Sounds to me like a classic case of an employer trying to wriggle out of all responsibility for tax, NI, training, PPE provision, holiday pay, etc.

[Jivemaster]

...Basically, the theatre where I volunteer has suggested that I register as self-employed/freelance (and get PLI) so that I can start getting paid for doing shows there as a casual technician now that I'm 18...

Cheers,

Max

 

Oh, as a sidenote, do you need an accountant for doing some freelance work? My parents accountant seems to think you do, but I honestly don't think that sounds right...why would I employ an accountant when I'm only going to earn a few hundred pounds a year as a freelancer?! http://www.blue-room.org.uk/public/style_emoticons/default/blink.gif

 

Max

Unless you have self employed work for several work providers then you will be a casual employee, not a self employed contractor. As a casual employee expect something not much above minimum wage, however as a freelance you need to provide your own PPE (overalls etc) and training and insurance so a charge rate in the order of £15 an HOUR is reasonable -guess they don't want to pay that.

If your parents have an accountant then there may be a very good reason to use them! Yes in all but the smallest businesses an accountant will save you a significant amount of time and money. There currently is NO legal requirement to have an accountant, but there is a need to fill in forms relating to tax and NI that need you to be fully up to date with all the stature law and regulations on the subject.

[Rigger]

 

Max

Unless you have self employed work for several work providers then you will be a casual employee, not a self employed contractor. ...

 

This is not true. The number of people you contract to no longer has any influence on you employment situation. You can be employed in a freelance capacity as long as the work you are contracted to do cannot be performed by an employee. i.e. perhaps their insurance does not cover work above a certain height or perhaps it is specialised work that employees are not trained to do. There is also dispensation for one off situautions or short term contracts, for example, where the theatre wil require extra staff for specific job roles for a large show. It depends on the type of work you are contraced to do.

[Junior8]

I really must disagree with the advice to use an accountant - unless you have masses of clients and/or are continually buying consumables. Book keeping for sole traders is a piece of cake and an accountant will save you little or no money on this side. It can be done very simply in a paper ledger or any spreadsheet programme income on one side, expenditure on the other. I designed a simple system for my business years ago using the old MS Works spreadsheet and am still using it now. There are precious few reliefs available these days (under what used to be called schedule D) that aren't readily understandable by anybody reasonably literate and if you file on-line the information you need is readily to hand. IMHO it is important, I would say vital, for any self-employed person to do their own books weekly - only that way do you know just how things are going. Remember too you can use as many accountants as you like but you are still responsible for the accounts you keep and the accuracy of your tax return. Learn the system and do it yourself.

[David Lee]

Totally agree there Junior8. As you are personaly resposible for your tax return you may as well learn to do it yourself.

[CharlieH]

Hmm....I work as a casual at a number of places, and one of my bosses advised me that I should really be registered self-emplpoyed to be taking pay from them, or I would be at risk of falling foul of HMRC. So I registered with HMRC; however now you are all saying I shouldn't have to be http://www.blue-room.org.uk/public/style_emoticons/default/blink.gif I have my own PLI and PPE (Steelies, Fall Arrest Harness, Tool Lanyards etc), and get minor work off of my own back (I guess you could say Freelance) as well as through casual employment.

 

Have I fallen into the trap that Max seems to be considering, or am I correct to be registered?

[Shez]

Hmm....I work as a casual at a number of places, and one of my bosses advised me that I should really be registered self-emplpoyed to be taking pay from them, or I would be at risk of falling foul of HMRC.

If you work as a casual, they should be paying you PAYE through the books, same as any other employee. If they contract you as a self-employed contractor, then you would invoice them for the rate that you set and would deal with tax, NI etc. yourself. Which does of course mean you need to be registered self employed.

 

HMRC have a set of questions here to help determine whether you are employed or self-employed. Note that you can be both employed and self employed at the same time - being an employee for one company and contracting your services out to others, for example.

[Junior8]

Have I fallen into the trap that Max seems to be considering, or am I correct to be registered?

 

No you haven't and it seems to be you have every right to be self-employed but don't call yourself a casual use the term contractor and make sure you look at the points Shez has mentioned. The point that was being made is that if HMRC suspect that a venue, which is your sole customer, has advised you to go self-employed they may be assumed to be simply trying to avoid 'ers NI contributions amongst other things. The issue is not actually with you, as long as you declare what you have earnt, but with the venue. If you are available to work for anybody, regularly do so, and supply most, if not all, of your own equipment and all the associated insurance etc then you are probably a self-employed contractor. (HMRC got very hot on this a few years ago to stamp down on a practice common at that time in big firms, where it was seen as clever to make key staff redundant and then bring them back to do exactly the same work on a consultancy basis often at the same desk! They also got a tad fed-up with cash in hand to casuals of various kinds that didn't appear in anybody's books! This is also why they are taking a look at the way some BBC talent is employed!)