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View Full Version : Freelance or Self-Employed? Important Advice from money expert Martin Lewis...



AliCat
02-02-2012, 03:33 PM
This is something we all need to be aware of when deciding to work freelance or self-employed.

http://blog.moneysavingexpert.com/2012/02/02/a-warning-to-freelancers-and-the-self-employed-everywhere/

0103media
02-02-2012, 03:41 PM
It's a good reminder...

2 types of freelancers..

1, you work from home and have to be self employed OR a LTD
2, you work in an employers office, in this case you have to be a LTD company due to insurance. (many freelancers use umbrella companies for this)

Not matter what or how you work in the uk you have to pay tax (once over the threshold).

Oakdale Studios
02-02-2012, 03:52 PM
I use the same accountant as Ken Dodd ;)

http://marksaccjokes.blogspot.com/2010/09/ken-dodd-and-inland-revenue.html

Coryographies
02-02-2012, 03:58 PM
It's important to remember!

What I do is, because I recieve money entirely through paypal, is I 'pay' myself each month from that account to my personal account, but only the money that is 'mine'. I keep the balance of what I estimate I will owe the taxman, rounded up. That way, when tax time comes around (this is my first year being self employed and I'm a bit scared of things going wrong), I'm hopefully not going to be hit with any surprises!

AliCat
02-02-2012, 04:15 PM
Don't forget that you can currently earn 6,750 before any tax is due and this is due to increase to 10,000 by 2015. So far, in my self employed life, I haven't had any tax bills - which is great on one front and really bad on another!!

nattynetty
02-02-2012, 05:34 PM
What I do is, because I recieve money entirely through paypal, is I 'pay' myself each month from that account to my personal account, but only the money that is 'mine'. I keep the balance of what I estimate I will owe the taxman, rounded up. That way, when tax time comes around (this is my first year being self employed and I'm a bit scared of things going wrong), I'm hopefully not going to be hit with any surprises!

It might be better to open another bank account (preferably a savings account) and transfer your 'tax' money into that every month as you won't be earning any interest on the money kept in Paypal. Also I remember reading somewhere that it's best not to keep too much money in your Paypal account for security reasons.

Critchley
02-02-2012, 05:45 PM
I use the same accountant as Ken Dodd ;)

http://marksaccjokes.blogspot.com/2010/09/ken-dodd-and-inland-revenue.html
Looking forward to a spell inside then???? lol

AnnieAnna
03-02-2012, 11:14 AM
Following Mr Media's train of thought, if you are number 2, a limited company, working in somone's office, and you've only worked for them, for around 2 years.... the tax man may argue you should be an employee. (Make that the media on a witch hunt if you are running the Student Loans Company ;))

And following Alicat's comment, if you have a lifestyle business (used to be called a profitable hobby) you can do tax efficiency (used to be called tax avoidance ;)) on having fun :p. (Before you sling me in prison with Vic I'm thinking when I had a proper job I bought crafting stuff with my taxed take home pay, full stop, but now crafting is my job I can put my crafting stuff down as a tax allowable expense which pulls my profits down so in my ill years I don't make enough to pay tax.)
(Oh! First time I've ever thought of being ill as efficient :o)

DarkFlights
04-02-2012, 06:53 PM
Very good advice there, to put at the very least, 30% of anything you earn away. Prefereably in the highest-interest account you can get away with having.
An ex-work colleague of mine had a partenr who worked totally self-employed, and one year had to pay out 12,000 in tax alone! Luckily, he'd put it away but only because she'd made him do so, I think some people simply don't think of these things.

Oakdale Studios
04-02-2012, 06:55 PM
Very good advice there, to put at the very least, 30% of anything you earn away. Prefereably in the highest-interest account you can get away with having.
An ex-work colleague of mine had a partenr who worked totally self-employed, and one year had to pay out 12,000 in tax alone! Luckily, he'd put it away but only because she'd made him do so, I think some people simply don't think of these things.

This is also a good time to point out that you can put it in Premium Bonds, your money is safe and you might get a win. Bank rates aren't much cop these days.

nattynetty
04-02-2012, 07:02 PM
Bank rates aren't much cop these days.

You can get instant access savings accounts paying about 3% at the moment http://www.moneysupermarket.com/savings/

And am I the only one thinking that if you do this and then find you haven't reached the threshold to actually pay tax that year then you could have a really nice holiday with those savings? :D

Oakdale Studios
04-02-2012, 07:14 PM
You can get instant access savings accounts paying about 3% at the moment http://www.moneysupermarket.com/savings/

And am I the only one thinking that if you do this and then find you haven't reached the threshold to actually pay tax that year then you could have a really nice holiday with those savings? :D


Bond wins are tax free, interest from banks can be taxable due to your particular circumstances.

Here's a good comparison site, make your own mind up. http://moneyfacts.co.uk/tips/savings/premium-bonds-vs-savings-accounts230311/

Saving the 30% and not needing it is a great idea too, bung it in the bonds and have 12 chances at becoming a millionaire :)

nattynetty
04-02-2012, 07:18 PM
The only problem with premium bonds is that they've greatly reduced the number of prizes and prize amounts in the last few years so there's less chance of getting anything back on your money. Personally if I didn't already have a Cash ISA I'd pop the money in there, again you can get about 3% on them at the moment and the interest is completely tax free - guaranteed free money :)

Oakdale Studios
04-02-2012, 07:20 PM
Each to their own :)