Employment in the UK continues its relentless rise, and we now have one of the highest employment rates in the world. The most recent trend is for more employed jobs, but one of the noticeable long term trends is the increase in self employment. Why would you want to be self employed? Employment, after all, offers some up front benefit, a regular pay cheque, sick and holiday pay and some protection. But many people who’ve been self employed for any length of time often can’t contemplate going back to a job. Why?
Mostly it’s the freedom to choose who you work with, what you work on and when you did it. Many people will work harder and longer to gain these freedoms. But then there are the taxes.
Employees just pay a lot of tax, and it gets taken out of their payslip before they see it. Tax for the self employed can be much lower, here’s how:
- National insurance is generally lower, with no employers NI.
- There is no national insurance on dividends paid from a company if you pay your profits in this way.
- Often married couples share the work and therefore have two tax allowances between them, so you can get a good standard of living without paying higher rate tax. You might also keep your child benefit.
If you start out as self employed or as a professional contractor, I like to understand your personal situation so you can pay as little in tax and get the most benefit for yourself and your family, within the law. The best way to do this is with our free initial meeting, where I’ll go through the best legal structure, make sure you understand what needs doing and when, how it all works and ensure you understand the tax you need to pay.