Contractual Work

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  • #990
    westham01
    Participant

    Hello,

    I am seeking advice with regards to the law and tax, as I have been offered some independent contractual work.

    I’ve been offered some work as a independent contract worker for one month and am just wondering what to do about tax, NIC’s etc. I’ve heard that if your contract is disguised as a employee, HMRC are likely to ask you to pay significantly more tax, interest and penalties.

    Any advice would be greatly appreciated.

    Thanks for your time.

    #992
    Jonathan Lea
    Keymaster

    If your contract is just for one month you are unlikely to ever be classified as an employee. However, you will need to ensure that your contract properly qualifies you as a self-employed freelancer (or contractor). Things in the contract that will identify you as self-employed will be you determine how and when you do the work, you can hire helpers or replacements for you if you are unable to do the work, you are contracted to provide services to the client over a certain period of time for an agreed fee and are not integrated into the company, you provide your own equipment (e.g. a laptop) and you pay your own tax and national insurance contributions on a self-employed basis (i.e. you will complete a self assessment tax return).

    #993
    cheapaccounting
    Participant

    As regards accounts and tax – will this be a one off assignment or do you intend to do freelance assignments in the future and so have some self employment income. The suggested advice would be different depending on your answer 🙂

    #994
    westham01
    Participant

    Thanks for the responses.

    This will just be a one off assignment on a one month contract, with a review at the end of the contract, for a full-time role within the business as a employee. However, I do feel the contract has been written in a controlled manner, similar to an employment contract.

    How do I go about paying my own tax and national insurance contributions? With regards to Tax, does it have to be over a certain amount to qualify for a self assessment tax return?

    #995
    westham01
    Participant

    Also, what is the threshold when it comes to paying Tax and NIC’s?

    For example, if I did only one bit of contractual work within a tax year, earning let’s say £1500, how much would I need to deduct and how would I do so?

    #996
    cheapaccounting
    Participant

    This will just be a one off assignment on a one month contract, with a review at the end of the contract, for a full-time role within the business as a employee. However, I do feel the contract has been written in a controlled manner, similar to an employment contract.

    This worries me … they cannot claim that you are not employed when it sounds like you are. TBH it sounds like they should be operating PAYE on your earnings and that is how the pay should be taxed.

    Given that I cannot really advise anything else ….

    My blog here explains more …

    http://www.cheapaccounting.co.uk/blog/index.php/beware-is-that-freelancer-you-use-really-self-employed/

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