What happens if you want to work for yourself?
If you’re going to work for yourself, you’ll be responsible for paying your own tax and National Insurance contributions. People who work for themselves are called ‘self-employed’.
Q. Think about a DJ or a singer, a window cleaner or a plumber. Which of these people do you think might be self-employed?
A. Well, the answer is you can’t always tell. Any or all of them might be self-employed or they might be employed. It depends on the terms of their contract.
When you start working for yourself, you should let HM Revenue & Customs know as soon as possible.
If you are going to be self-employed, it’s important to keep a record of how much money you earn from the first day.
It’s also important to keep a record of how much money you spend in running your business. This is because the Government gives you allowances on expenses like equipment, transport, or renting an office – all the things you need to run your business. That means that the money you use to pay for them will be tax-free.
If you become self employed you’ll be responsible for your own National Insurance contributions, as you won’t have an employer to make deductions from your wages. You’ll pay a flat rate £2.10 a week for each week you are self employed and if your profits are more than £5,035 for the year you will also pay 8% National Insurance on profits up to £33,540 and 1% on any profits over that amount.
You’ll have to fill in a tax return every year because you’ll be in Self Assessment. You can file your tax return online and all the calculations will be done for you electronically. But don’t worry, there’s a lot more information available online to help you cope with the responsibilities of being self-employed. Take a look at starting up in business
