More Britons are going self-employed every day, so they can reap the various benefits that being your own boss can bring. New figures have illustrated to the Turner Little team that thousands of people in the UK, especially high—earning professionals are now going self-employed to reduce tax.
Increasing popularity
There are various advantages available, if you become self-employed. It allows you to determine your own workload, operate independently of oversight and keep what you earn. You will, however, also be responsible for sending your own tax documents to HM Revenue and Customs (HMRC), the government’s tax agency, as well as for your business’ success, so this comes with responsibilities too.
Britons are increasingly seeing the benefits of working for themselves. The UK’s rate of self-employment has climbed by 22% since 2009 and this rate hit a new peak in December 2016. According to data supplied by the Office for National Statistics (ONS), 4.62m people in the UK are now self-employed. This means that in total, a staggering 15.1% of people in the UK now own their own firm.
Working for companies
However, there’s also a growing segment of the UK’s population who calling themselves self-employed, but working for firms, getting the best of both worlds. The best example is the Uber taxi driver. They register as self-employed and use their own cars, but operate under the Uber brand and have access to the popular app, making it easier to secure business, due to Uber’s reputation.
This practise is becoming more widespread among all industries, from “privileged” sectors which pay well such as banking, to those which provide more modest incomes and this is reflected by the numbers. Since 2009, self-employment has expanded by 100% in advertising, 90% in public administration, by 60% in banking and by 7% in the sector where Uber taxi drivers reside.
Tax advantages
A recent article in The Times has shed light on another advantage of going self-employed, while working for a company. By adopting this strategy, the firm you work under can take advantage of favourable tax laws, lowering employer national insurance contributions. This means that the company will have the ability to gift you with an equivalent pay rise, at no cost to themselves.
The savings that this can bring range from £200 for self-employed workers who cost their companies £10,000, to as high as £7,000 for those who earn £100,000. Data indicates that thousands of Britons, especially those working in “privileged” sectors, are now leveraging this strategy. According to Whitehall, it is estimated to cost the Treasury £6 billion per year by the end of the current Parliament.
Going self-employed
It is apparent that whether you decide to go fully self-employed, or simply switch your working status while operating under the guidance of a company, you can reap various benefits. It is wise, however, to enlist expert advice, when going self-employed, to ensure you comply with UK employment law and can reap these benefits. As part of our corporate services, Turner Little supplies the business and legal advice, as well as company formation services, that you require to work for yourself.
Turner Little
Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as Trust provider. You can receive our monthly newsletter by signing up using the form below.
