Working P/T and being self employed
Discussion
Just working part time for someone is not enough to establish that you are Self Employed. There are plenty of part time employees - and the PAYE system is designed to cope with such casual staff.
To be able to "prove" that you are genuinely Self Employed (I much prefer the proper term "trading on one's own account") you need to show that you are, in effect, running a business. Some of the criteria used to establish whether you are trading or not or whether you are or are not an employee are listed below:
You determine when and how you work
You use your own tools
You can substitute someone else in your place if necessary
You have your own business premises
You have your own business insurance
You advertise for other work
You have multiple customers
You are not entitled to "perks" available to staff (i.e. - you cannot use the staff canteenm, you canot take part in staff social activities, you cannot be invited to join company pension schemes)
You are not paid for holidays
You are not paid when off sick
You have no holiday entitlement
You do not have to "tick all the above boxes" but the more you can say "yes, that's me", the more likely you are to satisfy the Revenue that you are genuinely Self Employed.
PS - opening a bank account specially for the income received from this activity will not sway HMRC one way or the other.
Producing invoices for the work done is also a very weak piece of evidence when trying to prove yuour Self Employment status.
HMRC always say that your tax status (Employed or Self-Employed) is not a matter of "choice", but a matter of "fact".
To be able to "prove" that you are genuinely Self Employed (I much prefer the proper term "trading on one's own account") you need to show that you are, in effect, running a business. Some of the criteria used to establish whether you are trading or not or whether you are or are not an employee are listed below:
You determine when and how you work
You use your own tools
You can substitute someone else in your place if necessary
You have your own business premises
You have your own business insurance
You advertise for other work
You have multiple customers
You are not entitled to "perks" available to staff (i.e. - you cannot use the staff canteenm, you canot take part in staff social activities, you cannot be invited to join company pension schemes)
You are not paid for holidays
You are not paid when off sick
You have no holiday entitlement
You do not have to "tick all the above boxes" but the more you can say "yes, that's me", the more likely you are to satisfy the Revenue that you are genuinely Self Employed.
PS - opening a bank account specially for the income received from this activity will not sway HMRC one way or the other.
Producing invoices for the work done is also a very weak piece of evidence when trying to prove yuour Self Employment status.
HMRC always say that your tax status (Employed or Self-Employed) is not a matter of "choice", but a matter of "fact".
Being Self Employed with your ex-employer is also a danger area. It does happen but HMRC are very suspicious of such arangemnents.
The good news is that, if HMRC "ordered" you to be put back on the payroll (which they have the power to do), it is your EMPLOYER (not you) who will have to pay all the missing Class 1 National Insurance (Employees and Employers) that they shouild have been calculating on your salary.
On the assumption that you are OK to set yourself up as being self employed, you need to notify HMRC within three months of start up that you have commenced trading and you will need to start paying the self employed Class 2 National Insurance contributions within three months too.
The notification process automatically takes into account the setting up for paying Class 2 NI.
The good news is that, if HMRC "ordered" you to be put back on the payroll (which they have the power to do), it is your EMPLOYER (not you) who will have to pay all the missing Class 1 National Insurance (Employees and Employers) that they shouild have been calculating on your salary.
On the assumption that you are OK to set yourself up as being self employed, you need to notify HMRC within three months of start up that you have commenced trading and you will need to start paying the self employed Class 2 National Insurance contributions within three months too.
The notification process automatically takes into account the setting up for paying Class 2 NI.
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