Any benefit to going self-employed?

[missVN]

I've been speaking to my boss today about reducing my hours to 4 days a week (provisonally agreed ) and he has suggested I look into becoming self employed as he believes it will be more flexible and more lucrative for me.
I've worked for the company for 11.5 years and am in a senior role. My maternity leave finished in mid sept.

I just have a few questions about becoming self employed if anyone can help- currently, on top of my wages, I get my professional listing fee, subscription to a professionally group (includes legal advice), personal insurance (if I do anything negligent), 2 days and £250 towards course etc paid for. I get paid statutary sick pay and get the full entitlement of holidays. Is it financially beneficial for me to go self employed? I'm concerned about lack of ssp, holiday pay and that I would have to pay all the above fees myself. What can I claim back from the tax man?
My boss was talking about an 8% flat rate tax- he said I charge him 20% vat but only pay the taxman 12%, anybody know if this correct? Or how it works?
Also we are planning on having another lo in a year ir so, what maternity pay would be entitled to? Would they have to keep my job open etc?

Any information about self-employment would be great, I think I'm steering towards staying as an employed member of staff, don't really see the benefit

 

[Dinah93]

Go see an accountant. I run my own business as well as my waged job and what you can and can't claim is staggeringly complicated. Most accountants will do a reduced rate initial consultation.

You can claim a % of your household bills from your tax bill if you work from home, a % of your car expenses if you use this for business use, your professional fees, courses which expand your current knowledge (but not those which gain new skills from scratch). To register for VAT you need to be turning over £70,000 a year - I don't do this so I have no idea about submitting a claim there - what I do know is all my suppliers who are VAt registered charge me it at 20% - I find it illogical that this is not fully passed on to the govt. There is no flat rate for your tax return though, you are on the same scale as any employed worker.

Provided your income is sufficient you will be entitled to SMA, not SMP but it's at the same level. The big worry I would have is that as a self employed person no, they have absolutely no requirement to give you work again, and you would be entitled to no redundancy if this were to happen. Given you can claim for your professional fees as an employed worker anyway and get a bit of a tax reduction, I don't see the benefit to you of going self employed to be honest.

 

[missVN]

Thanks very much,just confirmed what I was thinking

 

[xxembobxx]

Jut to point out that you can't just choose to be self-employed. HMRC determines what is self employment and what is an employee.
I would have thought that as you are already an employee unless your job role changes then you have to stay an employee.

 

[My_First]

Jut to point out that you can't just choose to be self-employed. HMRC determines what is self employment and what is an employee.
I would have thought that as you are already an employee unless your job role changes then you have to stay an employee.

Not true. You can choose to be self employed by the company you currently work for, HOWEVER, there are a few things to bear in mind.

If you work exclusively for one company, (and I think this is what xxembobxx is referring to), as a sole trader i.e. not as a Ltd company, HMRC will not look kindly to either you or your employer, as it is deemed that both of you are avoiding employee-employer responsibilities. Basicially it means that you get to pay less tax, and the company doesnt have to pay you any benefits. Its a rule known as IR35. HOWEVER, if you were to work for them under a Limited company, (or even a LTD umbrella company), there is bugger all HMRC can do, because 'technicially' you could put someone in your place i.e. an employee of yours, instead of you. So your company is contracetd to do the work and not you. The way I get round the self employment (sole trader) is by mainly working for one company, but do small bits here and there for other companies, which shows that I do not exclusively work for just the one.

There are tonnes of benefits to being self employed, but negotiate a good day rate if you choose to, that is higher than your current one, as, you mention you dont get SSP/SMP, have to pay your own tax, NI etc. Since being self employed I have not payed much tax at all, due to having a good accountant, as you can offset expenses, heat and light, car and car maitenance, dry cleaming, membership subscriptions, PI Insurance, etc etc. against tax... Good luck on whatever decision you make, but do think about what your bosses motives are for it, because it offers no stability. If you take on self employed and the company folds 6 months down the line, you are without a job AND without redundancy pay, which would be quite good for 11 years service, plus they can easily terminate the contract of a contractor without so much as an explanation.