A tax question

[2tired2bewitty]

I currently work very part time for a small organisation doing some admin, but I am an employee and pay what little tax is due via PAYE. Another organisation has asked if I could do a similar role for them but just for a few months to cover a gap, however they want the role to be self employed so that they don’t have to go to the trouble of setting me up as an employee for such a short period.

I’ve never been self employed before and I don’t really understand if there are any implications in having two jobs using the different tax systems. Also, selfishly, I am helping them out here and don’t really want to make my life more complicated by having to do a tax return!

Does anyone have any advice on whether this will be straightforward or should I just turn them down?

It's fairly straightforward. You'll have to register for self assessment, keep a record of your earnings and if you're sensible put the tax aside if any will be due.
The tax return will have a section for employment income so if there's any adjustment needed (over or underpayment) it'll be done Theo

...through your self assessment.

When you finish, you can either keep yourself registered in case other bits of work pop up or tell HMRC you're no longer self employed.
Sometimes they still send you a return the year after.

Thanks, that’s very helpful!

Being self employed or employed isn’t a choice and it certainly isn’t something an organisation can choose do to avoid the bother of setting somebody up on payroll. In fact it would take a few minutes to set somebody up on payroll and I suspect it is more than they don’t want to give you your proper employment rights.

There are employment tests that should be looked at to determine if this is employment or not. A couple of key ones: can you set your own hours, can you turn work down, would you be able to send somebody else in your place all day, did you set the rate? If the answer to those is yes, then maybe it is self employment.

If it were genuine self employment, there is no way you can deal with this without doing a tax return. You would have to register with HMRC as self employed within three months and then yes complete a tax return.

This is really important OP. If you act like an employee (do you get sick leave? Use company items? Have to give notice of annual leave? Have an AL amount?) then you’re an employee, regardless of how they ask you to consider yourself.

If genuinely self employed, it depends how much you earn. If under £1,000 p.a you do not need to declare it (this is basic, but there are exemptions here) If over, then you’d register as self employed, do a self assessment, you can deduct any expenses related to your work (cost of travel, uniform, supplies etc) and the remaining balance you’ll pay tax on. If you earn enough you’ll pay different NIC too.

Thanks for those extra thoughts. I’ll go back to them to try and work out why they think I need to be self employed, because it does seem a bit strange. I suspect it is because there is a member of my family involved, but that’s why I don’t want to apply for the full time role they need the gap filling for, so I’m really not interested in hanging around long enough to acquire any employment rights!

If you decide to accept the role as self-employed, your negotiated hourly rate of pay needs to be higher than if you were employed by the company.
(for your pro-rata pension/holiday/sickness and overheads etc)

I suspect the rate of pay is the acid test here, as I can’t imagine they are expecting me to set my own hourly rate.

It is a test and I know I mentioned it first, but actually I would have put some of the other tests above who sets the rate of pay.

If I had to pick a test above all other tests, I would probably go for substitution, i.e. would you be able to send someone else along one day? After that I would probably go for whether you can turn hours down, or would you be expected to be their on specific dates and times.

Employment rights include things like pension, holiday pay, sick pay, minimum wage etc. These are rights from day one, they are not things that are only relevant over time.

I would reiterate that it isn’t a case of “accepting a role as self employed”. This is not a choice, it is not your choice, it is not your employers choice. You and they (particularly them) need to apply the tests to find out which is appropriate and then this must be followed