New research by the resolution foundation and reported by Start Up Donut states
The analysis shows that 60% of the growth in self-employment since 2009 has been in “privileged” sectors, despite them making up just 40% of the self-employed. The fastest growing sectors have been advertising (100% growth), public administration (90%) and banking (60%).
What we do know is that Self Employment has been growing in popularity as demonstrated by ONS statistics.
The level of self-employment in the UK increased from 3.8 million in 2008 to 4.6 million in 2015. While this strong performance is among the defining characteristics of the UK’s economic recovery, the recent rise in self-employment is the extension of a trend started in the early 2000s.
So why would you want to be a Freelancer.
- Pay rates – generally contractors are paid considerably more than employees
- Flexibility – you are your won boss but the downside is that you have to find work
- Tax – the following is from Contractor Weekly and is a quote from Seb Maley (QDOS)
“Operating through a limited company as opposed to an employee brings significant financial benefits. By taking a small salary and high dividends you pay far less National Insurance, saving around 26%. There are obviously associated costs involved in running your own company, such as accountancy fees and insurance, but the overall ‘take home’ pay will still almost certainly exceed that of an employee.”
We also have a growing ‘Gig’ economy
The ‘Gig’ economy describes the growing popularity of using workers on short term contracts on an on demand basis.
This type of work seems more popular with female workers
If you do become Self Employed ….
You’re responsible for:
- keeping records of your business’s sales and expenses
- sending a Self Assessment tax return every year
- paying Income Tax on your profits and Class 2 and Class 4 National Insurance – use HMRC’s calculator to help you budget for this
- your business debts
- bills for anything you buy for your business
- registering for VAT if your turnover reaches the VAT threshold
- registering with the Construction Industry Scheme (CIS) if you’re a contractor or sub-contractor in the construction industry
What is a Limited Company?
A limited company is an organisation that you can set up to run your business – it’s responsible in its own right for everything it does and its finances are separate to your personal finances.
Any profit it makes is owned by the company, after it pays Corporation Tax. The company can then share its profits.