Registering as Freelance...

[paulears]

Use of home work areas as an office, electricity and heating for home office, storage, repairs, stock, consumables, telephone, mobile, car/van usage calculations, training, consumables, allowances and excluded items, tools, travel and subsistence calculations.

 

Only this week I was talking to another self-employed person who had no idea some things he went through like mad could impact on his tax liability by reducing profit. Accountants can take your receipts and set them against allowable categories that as an individual you won't be aware of. I claim 33% of my gas bill to the business, but 50% of my electricity because I use lots for things purchased for the business. For me - these figures are ok with HMRC and have been actually inspected - a horrible year costing me a very large accountancy extras bill - which cannot be offset against your tax liability. If I'd not had an accountant I'd have been in trouble. If the accountant charges you £300 for simple accounts, they will almost certainly save you that in tax liability. You could do it yourself - but you'd just have to ask if you are competent to know what to put in the boxes - and I'll be honest and say I have no idea what some items even mean - all accountancy speak and HMRC codes.

 

The only REAL disadvantage in being self-employed only - is that your rights to unemployment benefit are limited - hence why Equity got special circumstances approved so that self-employed actors can claim benefits when not working, instead of 'resting'. The downside is that they have to pay class1 contributions on top of their regular class 2's as I mentioned above.

 

There is NO PROBLEM being part self-employed and taking paid PAYE work too. The two things will offset - and your accountant won't have any problems whatsoever with this. In my own case, when I worked for an exam board, they did not take NI - but to prevent charge backs, they deduct tax from everyone at the basic rate. So 20% of any work done for them is deducted at source. When my accountant completes my tax form, this is shown on the tax form and frequently meant that I'd over paid when my self-employment profit was calculated - and I'd get a tax rebate.

 

From the bosses viewpoint, they're worried that if you are not really a genuine self-employed person, then they should have paid national insurance on your pay, and deducted tax. If you were not really self-employed, just preceding to be, they would be liable for any missing tax and NI, even if you'd moved away. So having your UTR number makes them happier. Sadly - some also like it because they can just snap their fingers and tou are no more. No sick pay, holiday pay or even redundancy pay - you really are on your own. If you hurt yourself and can't work - tough!

[Seano]

The issue is not actually with you, as long as you declare what you have earnt, but with the venue.

 

This.

 

Don't worry about it - if they insist on paying you as if you were freelance, as long as you're happy with what you're being paid (bearing in mind that on PAYE you'd be entitled to at least minimum wage plus a bit of holiday pay etc..) then its not really your problem. Fill in your tax return (which isn't hard to do yourself), pay your tax and NI and you're in the clear. If at some point HMRC decide you should have been PAYE they'll be coming after the employer for back-dated employer's NI, but you're not going to owe them anything.

[Jivemaster]

However it's likely that the work provider will pay you minimum wage then leave you to fund NI Tax PPE PLI holiday and sickness out of that. a fair "minimum wage" for a truly self employed person would be £12 - 15 an hour.

[Brian]

If at some point HMRC decide you should have been PAYE they'll be coming after the employer for back-dated employer's NI, but you're not going to owe them anything.

I don't know the answer to this but what happens when HMRC decide you were an employee not self-employed. As you should have been paying Class 1 NI is there not a danger that you might end up with gaps in your pension entitlement?

[paulears]

NI shortages can be made up fairly easily - however, unless NI overpayments were the fault of HMRC, there seems no way to get them back. 11 weeks of unnecessary Class 1 contributions on a forthcoming contract, and nothing I can do about it, even though I'm also paying Class 2 and class 4. It seems to be 'extra' in the pot. In my case, it's because the forthcoming pantomime give their Company Managers the same contract as the top turns - the 'Key Artiste Contract' - so the benefits of such a contract match the Equity request to HMRC for actor protection. Another good reason to not join Equity. I bet they gave little thought to others who would be swept up in their 'benefit' to their members.

[Junior8]

I don't know the answer to this but what happens when HMRC decide you were an employee not self-employed. As you should have been paying Class 1 NI is there not a danger that you might end up with gaps in your pension entitlement?

 

They used to - but after the merging of the agencies I don't know if they still do - write to you if there was a gap in your NI record for any year with advice about how to plug it via voluntary contributions at a fixed rate. I think you used to have ten years to pay too. However with the change to paying a full pension on thirty year's contributions, rather than forty as in the past, gaps are not quite as damaging as they once were. It is however good advice to ask for your contributions record from time to time- if nothing else to make sure an employer has been paying in what they have deducted from you!

[paulears]

Somewhat ironically I've just had an email from Equity asking me if I'd like to rejoin because of the extra benefits they've got for their members - so I've just said their interference with HMRC just cost me over £1000 of unnecessary Class 1 NI payments!

[maxjones2000]

So, went into the HMRC office this morning (eventually!), and now the ball is rolling!

 

She said not to bother with an accountant at this 'level', as the tax return form is really easy to fill in and takes literally a few minutes. Also she said to make sure that you register for the NI Class 2 exception (as I'll be earning less than £8k!) otherwise I'll be paying £2.50 a week for nothing and so loosing money!

 

Thanks everyone for all your help - I really appreciate it! http://www.blue-room.org.uk/public/style_emoticons/default/smile.gif

Cheers!

Max J

[paulears]

Probably also worth noting that there is now a difference between an Acting ASM and an ASM role. Acting often means that you'll fall into the new Class 1 NI 'hole', but not get tax deductions if you have a se;f-employed registration, but more and more production companies have been told that their technical people are indeed employees, and get deductions for tax AND NI so when you're on tour or doing long static contracts, you are indeed an employee by virtue of the test. Sound ops contracted to the PA company should be safe, but HMRC are looking at the entertainment industry quite carefully. The tax doesn't really matter, because it's offset at tax return time - but it's difficult. A few have been burned by having to pay back tax and NI on self-employed people who weren't really, so just won't take the chance again.

[djw1981]

So, went into the HMRC office this morning (eventually!), and now the ball is rolling!

 

She said not to bother with an accountant at this 'level', as the tax return form is really easy to fill in and takes literally a few minutes.

Do remember that HMRC staff wont be keen to advertise all the ways you can reduce your tax liability (or even get tax rebates).

[paulears]

It takes a few minutes to do if you don't know what you could put in those other boxes to reduce your tax liability.

[kerry davies]

Do remember that HMRC staff wont be keen to advertise all the ways you can reduce your tax liability (or even get tax rebates).

 

I have actually found the opposite to be true. They have saved me plenty and enabled me to get rebates often enough. It helps that I am PAYE as a pensioner I think, but they have always been helpful to those I have advised to engage with them. It's the ones that hide away that they suspect of working a flanker and take an interest in.