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bigduckontax
bigduckontax, Accountant
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Is it possible to be self-employed with 3 places of work (or

Customer Question

Is it possible to be self-employed with 3 places of work (or more), & are there tax advantages to this, rather than having 3 separate jobs?
Joy
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello Joy, I'm Keith and happy to help you with your question.

I rather think you may be better off self employed. If you have your home as your place of business then your travel to and from your work locations is allowable against your profits.

If you have separate jobs then your place of work would be at 3 discrete locations and travel from residence to place of work is not allowable for tax purposes. If you are employed you can only have one place of work, or in your case, 3, which I why I said discrete! Also one job will carry your tax code the other 2 operating on code NT (ie tax at the basic rate on all wages) which could well recover too much tax and leave you with an annual tax reimbursement to wait for.

Otherwise I can't see any advantage tax wise. NI may be a problem though in the long term. I suspect with 3 jobs you will be below the lower earnings limit for each individually.
Customer: replied 3 years ago.

Ok Keith thanks. Can you elaborate on why NI may be a problem? Generally self-employed Ni is very low isn't it, & when self-employed & employed at the same time, I mostly have had to pay 2 lots of NI too! So wouldn't the NI be cheaper too? I do have a community healthcare system that I can pay into, so my health needs would still be covered, if necessary.

Expert:  bigduckontax replied 3 years ago.

Probably, and if you get hammered with two sets of NI from different employers you cannot reclaim the excess!

 

As self employed you pay both Class 2 and Class 4 NI. Class 2 is GBP 2-70 per week if you earn more than GBP 5725. Class 4 is 9% on earnings between GBP 7755 and 41450 and 2% thereafter.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3822
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.
Expert:  Sam replied 3 years ago.
H JoyI thought I had better offer a little bit of information regarding your situation, You cannot simply choose to be self employed - there are employment status remit to meet and it may well be that the way in which you undertake your duties render you are having to be employed, rather than self employed. Might I ask what your jobs are - what duties you perform and what business equipment of your own you have and use, and whether you could make a profit as well as a loss - this will ensure that you are not being guided down a pathway you are not permitted to undertake.I can then advise further ThanksSam
Expert:  bigduckontax replied 3 years ago.
This is not entirely correct. You could negotiate with your three prospective firms with a view to being used as a contractor which would crack the problem.
Expert:  Sam replied 3 years ago.
Hi Joy

Link re employment status legislation - this applies to contractors too Im sorry to say! (seems they get you all ways!)

http://www.hmrc.gov.uk/employment-status/

Thanks

Sam
Expert:  bigduckontax replied 3 years ago.

I wouldn't bother; HMRC merely emphasises the summary view that an employee can be told what to do and how to do it whilst a contractor can be told what to do, but not how to do it. If her firms agree there is no problem as to her being a contractor.

Expert:  Sam replied 3 years ago.

Hi Joy

 

 

I am sorry you are getting conflicting advise - I worked for HMRC for 26 years providing education on employment status and whilst there are occasions when there is scope to contract (become self employed) these are far and few in between, so whist I respect the fact that Bigduck is trying to allay concerns you cannot ignore HMRC legislation on the topic

 

They advise

Employed or self-employed?

 

A worker's employment status, that is whether they are employed or self-employed, is not a matter of choice. Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement. The tax and National Insurance contributions (NICs) rules do, however, contain some special rules that apply to certain categories of worker in certain circumstances. See section on special cases.

 

If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor. If you are an engager, it is your responsibility to correctly determine the employment status of your workers. A worker's employment status will determine the charge to tax on income from that employment or self-employment. It will also determine the class of NICs, which are to be paid.

 

So if you would be happy to advisee what your jobs are - what duties you perform and what business equipment of your own you have and use, and whether you could make a profit as well as a loss, whether you will advertise to other businesses to provide these services, as a start point that would be great

 

 

Then we can be sure you are being advised the right pathway for you, within the remit of what the businesses that are engaging you are permittd to allow. Thanks

 

Sam

Customer: replied 3 years ago.

First of all, its my husband we are discussing. He is leaving one employer, but they want to have him a couple days a week perhaps, he works for them often also based at home, depending on my situation (he also does work for me as a carer) he has his own office, part workshop, & many tools at home, as well as some of his own tools he uses at different workplaces; he has two work vans also of his own, & a car on his own work fleet insurance. He does sales & projects for them, involving many aspects; also involving creation of drawings for layouts (tables & chars supply to restaurants & hotels). The work he does for me is as a personal assistant. He also is going to give services to another bespoke furniture company who require him to synchronize their services to this industry, probably a couple of days a week, or so. He would also use the same vehicles & tools, & also other tools of his & yes, the idea would be to make a profit, exactly.. He could also advertise to other businesses for similar contracts in a similar line, & if self-employed totally, would enjoy doing so. His works cannot have control over him because of the carer work he does for me. His hours are very scattered & non-routine when at other places of work, although ongoing or fairly long term, eg several months or a couple years at a time. I would like to know what you think. It would definitely help if he was self-employed, as he would have more control than he has presently over his work-hours & how the work is performed. It would also be more profitable, we feel.

Expert:  Sam replied 3 years ago.
Hi

Thanks for your response

Does your husband receive carers allowance for you - or is a direct payment paid to you, for which you pay him?
If he received carers allowance, then this just has to be declared as benefits received - so is neither employment or self employment.
But if it a direct payment that is made to you, that you pay him, then this is employment and will remain so - (and I assume PAYE is operating against this already) If not let me know and I can advise further.

The current employer - who want to have him a couple of days a week,. it sounds like there is scope for him to be self employed as although he has been undertaking this work as an employee,he has his own workshop,office tools and also will use his own transport. So he just needs to be sure the current business are happy for him to invoice for his time, and that all materials, costs are covered by your husband, for which he then claims back as expenses against the self employment (and it may be that this gets built into the charge he makes, along with covering any travel costs)
And the fact he will also provide same service to this bespoke furniture company and plans to advertise, can also fall under self employment.
So that's all fine.

So once his current employer agrees that this is possible (as they oversee his work position and the duties and therefore will ensure that employment status is not breached through this new arrangement) then he should contact HMRC to register for self assessment - self employment.

But the carers payment if a direct payment situation has to be employment I am afraid and PAYE operated against it, let me know if you need more information on this.

Thanks

Sam

Customer: replied 3 years ago.

Hello Sam - I get DPs. My husband is one of my main carers, but not my only carer; i have many. I have complex care needs & need full-time care.. My carers are all self-employed with very unroutine hours, & I also use agency & professional workers. He pays tax & NI on invoices he raises thru a current (previous) self-employment - self-assessment. However the available money for him is very low, & our outgoings very high as we also had a large family of 7 children all living at home, with various needs, all of those old enough out at work since further education - & so although he does many varying hours for me as a constant care, he also needs to work a) income, & b) sense of identity. We had thought that we should set up some form of Trust fund instead for our special case, but are very confused by the intricate laws & our needs & just seem to go on paying out loads of tax & NI, & not getting any benefit such as Tax Credits because my husbands total income appears 'too high'. However it is unfair, as he is forced to do terribly long hours 7 days a week, never gets a real chance for a break or a holiday, & I am afraid of the eventual toll on his health. Meanwhile though we do not know which way to turn as taxes do have to be paid if they appear to be due. Also, if one of his furniture companies dropped off & he had only one (plus me & perhaps a few smaller jobs here & there) would not this then be seen by HMRC as an employment? We can't risk getting into trouble, as we would not be able to pay any large fines &/or in any case don't wish to do the 'wrong' thing.

Expert:  Sam replied 3 years ago.
Hi

Thanks for your response

Your carers should not be self employed - they should be employed and there is also an issue regarding paying the person who lives with you

I have added a link here regarding employing someone who lives with you - http://www.carersuk.org/help-and-advice/practical-help/care-and-support/direct-payments/paying-family-members
I am sure you have this agreed with the LPA - that this is acceptable.

Link here regarding whether they can be self employed
http://www.hmrc.gov.uk/manuals/pommanual/paye23010.htm#IDAWE00H

So these are two issues you need to consider, but I will assume both positions (employing your husband AND the fact that you not operating PAYE on the payments has been agreed)

AS for the trust fund situation - you will need to seek legal advise on this, as whilst we offer tax advise on trust funds - (although you would need to list this as a new question as advise has already been given over and above the original question value) we cannot advise on the legalities, as we are not UK law experts - but there is a UK law forum here on Jus Answer, so you may wish to post a question there.

I can fully understand your concerns with your husbands position - and that he works such long hours, but the first position is to ensure the right tax legislation is applied to the payments he receives, and whether employed or self employed - he should not be any worse off - and lumping everything together as self employment would not work, because even if we could say that the money you pay him to care for you - can be self employment he would need to register this as a separate self employment - so pay 2 loads of Class 32 national Insurance, and possibly two sets of Class 4 (if the income exceeded the Class 2 and 4 thresholds)
The threshold are
Class 2 this tax year £5725 Next tax year £5885
Class 4 this tax year £7755 Next tax year £7956

If one of the furniture company drops off, as long as your husband continues to actively seek new business (by advertising) then HMRC would accept that this is self employment, as he uses his own tools and his own premises and works the hours that suits.

So step by step
1) Check the direct payment position - should the carers (other than the agencies you pay to provide care) be employed - I feel they should be
2) Have you got agreement that your husband can be a paid carer - if yes, then this should be employment not self employment
3) The furniture businesses - as long as he advertises - and the current employer is happy there is no breach of employment legislation with the work he will continue to provide, as the new work also falls into not being in breach of employment status, which does not appear to be the case, then both of these and any future work undertaken can be earned through self employment.
4) with employment if the income is less that £111 a week, then no Class 1 National Insurance is due, if more than 12% is due on anything over and above this limit
5) If self employment is below the threshold advised above for Class 2 and Class 4, then no National Insurance is due - but if above, then with Class 2 its a flat rate of £2.75 a week, soon to rise to £2.75 after 05/04/2014 and Class 4 is charged at 9% on anything over the thresholds advised


Thanks

Sam

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