Hi, anyone on here know anything about being a sole trader and the tax man?. I've recently had an opportunity to start up on my own (I'm a Graphic Designer), I've been offered a six month rolling contract to work 4 days for one company, now obviously my intention is to get other clients in swell but if this didn't happen and over the course of the year I had just had this one contract for one client, is this OK with the Tax Man or would I be on dodgy ground with regard to the Tax breaks available to a sole trader?

Cheers in advance

You need to register with them with the requisite time limit: www.hmrc.gov.uk/selfemployed/reg ... elfemp.htm You need though to be sure that your 4 day status is genuinely self-employed.

You need to register with them with the requisite time limit: www.hmrc.gov.uk/selfemployed/reg ... elfemp.htm You need though to be sure that your 4 day status is genuinely self-employed.

its going to be difficult to get many tax break if you are on a 4 days contract for 6 months, thats sounds a lot like a full time job to me, however, if you squeeze in lots of other contracts and dont work set hours in your contract, oh and don't get greedy with the tax man you should be ok.

Get an accountant and ask questions.

I'm going back a bit but I used to be "freelance" and was entitled to claim all sorts of things. Travelling expenses to and from that job, subsitence (food when working late). A percentage of your mobile. Post, Stationery, Print. Equipment. Computer Hardware & Software. If you use a car for work related stuff. All manner of things. But that was 13 years ago and all manner of things may have changed.

Cheers guys

Ive got a meeting with an accountant tomorrow to see whats what, I'm not out to fiddle the tax so to speak but obviously I will want to claim back what I can within the rules.

Dally, I'm unsure what you mean by genuinely self employed?

I will basically be contracted for a set number of hours per week and I will invoice them either every week or every month for those hours, as I say I will hopefully be using the hours I'm not there to generate other work.

A few of their favourite questions when they're deciding on employment status:

Are you paid per task or per hour?
Can you substitute somebody else to perform the work?
Do you provide your own working materials/equipment?
Can you choose not to come in?
Where do you carry out the work, is it fixed or of your own choosing?

Yes I would be paid per hour.

Not sure about substituting someone, I could arrange to get another freelancer to go in if I couldn't make it.

Yes and no, I would take a laptop but they have a mac available to use.

I could choose to change the time and hours I came in but I would have to do the set hours per week as stated in the contract.

I would mainly be working on their premises but would work from home sometimes as well.

Ask the accountant about IR35 and how to avoid it. It may be that there are a few subtle changes you can make to the arrangement with the company so that you don't fall foul of the tax legislation. You might struggle with the arrangement as it is now, particularly if you used to be on their payroll.

I was on their payroll but that was about a year ago.

Sounds like you're possibly a borderline case, but being honest I think you're probably open to the revenue saying that you're employed if you don't pick up other work as well. Have a bash at [url=http://www.hmrc.gov.uk/calcs/esi.htmthis.[/url

We had a PAYE inspection last year and they picked up on somebody we had a few years ago who used to work a bit for us and was a borderline case. Because it was small sums and he had not done any work for us for a while and was unlikely to in the future they left it as it was, but said that had it been more current they would probably have looked at it more closely.

Also, if it's an arrangement the company are making with several other people this could have an impact.

I had a go on the ESI thing and it said I was self employed.

I don't think the company has anyone else on the same sort of contract, as it happens I may have just sorted another client out who I would be regularly invoicing, so I would have at least 2 clients.

You could be fine. More clients will help massively.

Sounds like it's either a lot tougher or people are guessing what you can do.

I was a typographer, spent 3 years freelancing. Set a day rate, then an hourly rate after 630pm. Claimed all that I was entitled to. Car, petrol, travel, flat, utilities, postage, stationery, print, computers (which depreciate and an amount will come of next year’s tax bill too) and of course the miscellaneous column. From memory a percentage of my flat was tax deductible as it was used as my office. So if you earn £25,000 and your expenses were £5,000, your tax will be based on the £20,000 that's left. I spent years with the same company and did the odd job for others. You don't get things like holidays or sickness as you well know no doubt.

But mintball may be able to fill you in more as she does get paid holiday as a freelancer for some amazing and fortunate reason. Jammy moo.

It's got a lot tougher, especially with single-employee limited companies working almost exclusively for one client.

The OP should change his name to Starbucks and then tell HMRC to fook off

Ive got a meeting with an accountant today so I'll see what he says.

What seems really annoying about the IR35 tax is that it seems if you fall within it, you get taxed more than if you were an employee but obviously without any of the benefits of being an employee.

Is it only the rich that are allowed tax benefits still then? Blimey.

And it was brought in by a Labour Government! although the the coalition seemingly had an opportunity to change the tax law but unsurprisingly did bugger all about it.

It's as much to get the contracting companies as the individuals, really. A lot try to pass employees off as sub-contractors to save paying NI.

Get yourself registered on Sark and avoid any sort of tiresome paperwork and tax, although this advice does not apply if you are a teacher for the island is saturated with teachers with [url=http://www.dailymail.co.uk/news/article-2227905/Supply-teachers-caught-offshore-tax-row-Taxpayers-lose-millions-staff-employed-foreign-firms.html?ITO=1490&ns_mchannel=rss&ns_campaign=149024000 of them all working in one small school[/url.

Having just spoken to the accountant he thinks I'll be ok, I just have to be careful how the contract is worded, probably best if the contract is to oversee one whole project over the six moths rather than various little jobs as and when they arise. But having another client will be enough to prove I'm self employed he reckons. Also he did say that there has hardly been any cases of people actually been investigated and brought into the IR35 tax bracket, although he did say they may be looking to clamp down on it.

Are you going to be working as a sole trader invoicing your clients personally, or are you going to be invoicing through a limited company?

If it's the former, then while you need to think about employment status you don't have to worry about IR35. The IR35 legislation only applies if you are providing your services through your own limited company, e.g. Christopher Ltd.

Given that the latest information sheet was published in may this year, I would hazard a guess that a crackdown is coming. Thinking about it there must be tens of thousands of one man band limited companies out there working for single clients through agencies - effectively disguised employees in organisations such as the NHS (many onsultants work that way apparently) so a clampdown would be potentially both very easy and lucrative. It remains to be seen though whether the individuals positions could be easily defended and whether the government would back down in the face of the lobbying that would come their way if a crackdown took place. My advice to anyone considering this type of thing would be to keep the difference they're pocketing sitting in the bank just in case they have to give it back at some point.

I will be a Sole Trader trading under a business name and billing the client directly, no third party involved.

I'm fairly confident I will be OK.

You will be fine, why wouldn't you be, the only way you won't be fine is if you don't pay the tax you should pay!