Self-Employed is an individual who runs his or her business for themselves and is responsible for the successes or failures of the business. You can be an employee and self-employed at the same time. Meaning, you can work for an employer during the day or part-time and later you can run your business as self-employed.
What is the role of a PSC?
As a self-employed you do not have the employees right and responsibilities, also you are not paid through PAYE ('pay as you earn', it is an amount of income tax that has been deducted from your salary before you receive it each time when you get paid more than £120 a week).
However, your health and safety are protected as well as, in some cases, you might be protected against discrimination. The right and responsibility as an employee will be sat out in the contract that you will have with your client. The contract should include not only the basic information (names, contact details, your role, payment requirements), but you can also include specifics regarding the project or job that you will be doing (ownership, termination terms or rights for usage).
Things you MUST do when becoming self-employed.
1. As a self-employed You will be solely responsible to pay your income tax and National Insurance, therefore You must register yourself with HMRC to complete a Self-Assessment Tax Return every year.
It is advised to register as soon as you become a self-employed, however you can do that any time before 5th October of your business second tax year. The tax year is from 6th April to 5th April the following year. Example: you working as self-employed from March 2021 then you would have to, at the very least, register with HMRC by 5th October 2021. It is because March 2021 is in the 2020/21 tax year and 5th October 2021 is in your business’ second tax year.
As a self-employed you need to calculate your own income tax and complete Self-Assessment Tax Return, as well as pay your own NI contributions.
For detailed information click on this link:
GOV UK self employed
2. You MUST register for VAT with HMRC, if your business’ annual turnover is £85k or more. Even through the year, if you think you will hit that mark, you must register, or you are risking paying a fine.
Some might decide to register for VAT voluntarily, without reaching £85k. Having VAT number gives you more credibility and then you can claim the VAT back on some of your purchases that you have made.
Register for VAT here:
GOV UK HMRC VAT Registration
3. It is good idea to keep your business records separate from your personal expenses. Therefore, it is recommended to have business bank account.
4. As a self-employed you are obliged to keep records of all your business transactions and expenses as you would need to provide them when completing Sell Assessment Tax Return. Keeping on top of your accounts will enable you to do your self-assessment quickly and efficiently. If you are unsure if you can manage your self-assessment yourself, you can hire an accountant or use online accounting packages.
5. As you no longer pay a pension into your workplace, it is a good idea to set up a privet pension so that you still putting money a side on monthly basis for your retirement. At the moment on the market there is big variety of private pension providers, so make sure to choose the one that is most suitable for you and remember to read T&C.
If you would like more information, please contact our customer engagement team who would be delighted to assist you further.