[Closed] Being self employed. Are we screwed in the next budget

The big differences in tax some refer to as tax planning / tax advantages benefits to the SE are in most cases going to be due to inappropriate claims for expenses which as suggested above is fraud not tax planning. I expect HMRC will be checking furlough claims pretty closely very soon..and if overclaims are made on furlough one might expect other claims like business expenses to be looked at as well while the books are open.

But there are different rules for expenses which can be claimed between an self-employed person on one hand and an employed person on the other (ignoring companies). So, a self employed person (not working through a company) can claim for expenses "wholly and exclusively" for the business. An employee has an extra test to pass to claim an expense which is the expense has to be "necessarily" incurred. So a self employed person could claim for a computer / protective work clothes / travel costs whereas an employee might not. This extra hurdle knocks on the head scope to claim much at all for an employee, even stuff which is incurred for work purposes. So when comparing the position for SE you have to be able to distinguish between the fraudulent claims and the differences baked into the rules.

I don't have a problem with the difference in rules either - it would be mayhem if employees could claim all "work related" expenses against tax and many "unfairnesses" would result. The SE should be able to claim valid business expenses, as they can now, but if they make claims for personal expenses then that is unfair/fraud but there are already rules against that - and I expect there is a much increased likelihood of them coming unstuck in future.

So a self employed person could claim for a computer / protective work clothes / travel costs whereas an employee might not.

Really that's an issue for people to take up with their employers though, if there's extra expenses to your job, your employer shouldn't be expecting you to foot the bill.

I know that's not the reality, but that's where the liability really lies. Employers not renumerating their employee's correctly.

So for me that isn't a tax issue. It's the employers responsibility. Kinda the point of the employer/employee relationship is the simplicity. The employer should claiming against these things and supplying the employee.

I see operation divide and conquer is going well.

Pick a thread, pick any thread.....

😆

Well… I rarely contribute these days but thought I’d put in my tuppence…

As a self-employed person:

- I can’t/don’t deal in cash, my customers are SMEs
- My partner works for a living
- I am a limited cost trader providing professional services
- I don’t wish to drive a van or ride a motorbike

There are no meaningful tax reduction avenues available to me.

Creative accounting is a myth – if you want to skirt the bounds of the law, that’s your call – but I couldn’t sleep at night

I get paid a slightly higher day rate to compensate for the lack of employee benefits.

I work for 30-40 companies on small projects over the course of a year, being PAYE is not an option.

I offset the following against Tax:

- Mileage (45/25p)
- Home working - £18/month
- Software licences
- Insurance
- Hotel accommodation (when working)
- 50% mobile phone costs

When I purchase a £1500 laptop (for example), I do so out of my own operating income, it isn’t free, I don’t pay £1500 less tax, It costs me £1500 less the tax I would have paid on £1500 profit (say £500). So, the ‘free’ laptop actually costs me circa £1000 from my take home pay.

In short, I pay just as much tax as anyone, commensurate with the conditions in which I work.

“I have a mate who has a mate who is paid in cash, pays his wife a wage and rides a Ducati to work….”

Blurting out this nonsense as ‘the norm’ doesn’t help anyone, it simply isn’t representative.

Well said @MTT. Skimming through this thread, which has snowballed, shows a lot of hate for the self employed, based on stories of a mate of a mate, of a mate who works for cash, and 'he's loaded". The world isn't like that, I have an accountant who is straight down the line, as am I because we run business' that we want to continue and progress. Please remember also that the "gig economy" wasn't a choice of any employee, but of those way above making the serious money and also the same people avoiding their tax.

I work a mon to fri job but am just about to pick up some contract work on the occasional saturday. I used to do this work a few years ago as a Ltd company but not an option anymore.

Just had the projection through from the Umbrella company and its an equivalent 55k under IR35 or 70 ish outside IR35. In my limited understanding inside IR35 is basically treating it (and probably correctly so) as a PAYE salary situation in terms of tax etc.

I mean just looking at the numbers..... there seems to be a pretty massive difference between the two?

Having done this work before as a Ltd im fairly aware of the running costs, setup, insurances etc and even after all that it still works out signifcantly more profitable. I'm slightly at a loss to rationalise this with everyone saying theres very little benefit to being self employed?

If you are a company you aren't self employed

back to the original question. I think we are all going to get screwed, self-employed or not at the next budget.

unless your party donations are up to date of course.

I that point I think we can all agree!

We are pleased to advise you that following receipt of further information from partner organisations that was essential to us being able to authenticate your business, your application has now been accepted.

A payment of £4,000 to the bank account specified in your application will be processed within 2 working days.

From that newly self employed fund, got awarded.

Wee bit of good news at last, bring me back up to somewhere approaching last year, so fair play to the SG for going someway to covering up last years glaring errors.

My emails bugging my MSP, paid off. 😆