Determining whether a worker is Employed or Self Employed isn’t always easy.
HMRC updated and improved their tool in April 2015.
The Employment Status Indicator (ESI) tool enables you to check the employment status of an individual or group of workers – that is whether they are employed or self-employed for tax, National Insurance contributions (NICs) or VAT purposes.
The ESI tool is essential for anyone who takes on workers, such as employers and contractors. (The tool refers to anyone in this position as an engager.) Individual workers can also use the tool to check their own employment status.
The tool cannot, however, be used to check the employment status of certain workers:
company directors or other individuals who hold office
agency workers
anyone providing services through an intermediary (sometimes referred to as IR35 arrangements)
The ESI tool is completely anonymous, so no personal details about the worker or engager are requested.
Almost a third of British workers run some kind of creative business outside their main job contributing an estimated £15bn to the UK economy, according to new research from Moo.com. Profitability among this group of enterprises has increased by 32% in the past year. One in ten part-time creative entrepreneurs plans to leave their job to focus on their business full-time within the next year. However, 60% said it was their passion for the business, and not making money, that motivated them. The most popular part-time creative ventures are in food and cooking, gardening, photography and knitting. (According to Law Donut)
So why are micro businesses taking off:
You can start off working at home
Your start up costs are low
You can do it part time when it suits you
With wages frozen and costs rising it can provide a useful additional income
Its easy to be price competitive with low overheads
The Internet makes it easy to sell your goods and services
Your social capital can be used to generate sales ie use your contacts and connections
There could tax advantages – employees generally pay more tax than sole traders
Some clients prefer the personal touch
It could be start of something big
Here are my top 20 home based business ideas:
Get a lodger – Under rent-a-room a taxpayer can be exempt from Income Tax on profits from furnished accommodation in their only or main home if the gross receipts they get (that is, before expenses) are £4,250 or less
Ironing and Laundry Services – Always popular and you can start with friends and family
E Bay Trading – as E Bay say… The first task is to sort through those bulging drawers and messy cupboards, finding stuff to flog. Get a big eBay box to stash your wares in, and systematically clear out wardrobes, DVD and CD piles, the loft and garage. Use the easy 12-month rule of thumb to help you decide what to offload: Haven’t used it for a year? Flog it.
Blogging – Blogging has taken off and many businesses are looking for people to write blogs for them
Candle Making – You can sell the candles on line and its easy to buy the wax and things you need to make the candles
Car Boot Sale – As with E Bay but without going on line
Cake Making – Make sure everything is labelled correctly and you comply with Health & Safety issues
Data Entry – The internet makes it easy to enter data from where ever you are
Social Media – Similar to blogging, businesses need help to manage Twitter, Facebook and Linked In
Website Design – If you have the expertise, go for it
Sales Parties – Cosmetics to Ann Summers, there is a long list of opportunities
Sewing and Clothes Alterations – Perfect before and after Christmas
Jewellery – Making and selling jewellery is always popular and great for Christmas presents
Car Repairs – Assuming you have the skills needed and comply with legal requirements
Pet Care – Walking dogs or grooming is popular
Virtual Assistant – Also personal organiser or personal shopper
Wedding Planner – You could start by creating a blog about your expertise
According to figures released by the Office for National Statistics last week, self-employment is at its highest level since records began almost 40 years ago.
There are currently 4.6 million people self-employed, with the proportion of the total workforce that are making a living for themselves sitting at 15%, compared to 13% in 2008 and less than 10% in 1975.
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.
Many workers want to be self-employed because they will pay less tax, this calculator gives you a quick comparison between being employed, self employed or taking dividends in a limited company.
HMRC have a an employment status tool to help you determine whether a worker can be self-employed or should be an employee http://www.hmrc.gov.uk/calcs/esi.htm
The UK has seen the fastest growth in self-employment in Western Europe over the past year, according to the Institute for Public Policy Research (IPPR).
The number of self-employed workers rose by 8%, faster than any other Western European economy, and outpaced by only a handful of countries in Southern and Eastern Europe.
The IPPR’s analysis shows that the UK – which had low levels of self-employment for many years – has caught up with the EU average. If current growth continues, it says, the UK will look more like Southern and Eastern European countries which tend to have much larger shares of self-employed workers.
Something like 80% of all the new jobs created since 2010 are, in fact, self-employments, and there are a number of things that very significantly differentiate self-employments from jobs.
The first is security: there is none.
The second is durability: vast numbers of new small businesses fail, which is one reason why I doubt the official statistics. I am sure they record the supposed start-ups correctly but seriously doubt if they have properly counted the failures.
Then there is the issue of pay. The evidence is overwhelming that in recent years earnings from self-employment have, on average, declined significantly.
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.
Many workers want to be self-employed because they will pay less tax, this calculator gives you a quick comparison between being employed, self employed or taking dividends in a limited company.
HMRC have a an employment status tool to help you determine whether a worker can be self-employed or should be an employee http://www.hmrc.gov.uk/calcs/esi.htm
In summary, why is it attractive to use Self Employed Freelancers?
Skill is more important than location in many business sectors – we live in world where internet can allow you to work with anyone at anytime, you can now track down the best person to work with even if they live thousands of miles away
Lower fixed costs – Using Freelancers will lower your fixed costs (in similar way to Zero Hours Contracts), you employ them for a specific project and only pay for what you need so there isn’t any surplus capacity
Tax advantages – Freelancers run their own business and that means they pay less tax than employees. Employers save tax too, such as Employers NI.
Competitive Advantage – You can put together a team for a contract rather than finding contracts that fit your workforce, this means you can hire the best.
110% Commitment – A Freelancers success and future work depends on them performing to the highest level on every contract, failure is not an option for a successful contractor.
So do you think self employment is good for the UK?
