I would appreciate help on going self employed while 18 months to go in my iva ( less the re-mortgage/ extra 12 months reveiw) Currently i am employed and have been since my iva started, But there is a job on offer that would pay rougghly £30- £40 PER WEEK more than i am getting with my current job, As i would pay 25% self employed tax as a self employed worker, is it going to cause problems to my iva situation or iva supervisor ? Having never been self employed not sure how this works without being in an iva let alone being in one ??
Hi John, I've never been self-employed either but do know there are posters on the forum who are, so if you hang around I'm sure someone will be able to answer your question very soon. All changes in income should be discussed with your IP to ensure the smooth running of your IVA. x
IVA final payment left the bank on the 26th January 2013...looking forward to a debt free future.
My wife has a self employed element to her income, having a part time business as well as being employed elsewhere. As far as the self employment bit goes, we have to submit copies of the accounts we provide to HMRC, and the profit (after tax) is deemed part of her income for IVA purposes. Your IP should be able to sort it out, ut it would be best to have a word with him / her before making any move.
Don't forget, as well as the tax, you will also be paying your N.I stamp, so your deductions will be nearer 33%
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
You don't need consent from your Supervisor to go self employed. It's up to you to ensure that you keep proper records of your business (as opposed to personal) monthly income and expenditure and make adequate provision for paying future tax/NI bills. You might consider doing this on a simple spreadsheet initially. You should be able to produce your accounts and tax return information from these records as well as provide them to your Supervisor when he needs to do the final annual review.
Are you sure you want to go self employed? It's a big step to take. The biggest change will be that your monthly income may no longer be guaranteed and you may find that it fluctuates to such an extent that you can't afford to pay monthly voluntary contributions. Also, you wont get paid if you're off sick; and what about holidays?
Regards
Andrew Bowers
Licensed Insolvency Practitoner
You don't need consent, but it would be well worth discussing this with your Insolvency Practitioner who will be keen to know if this is likely to have any impact on your finances moving forward. Self assessment tax will not have to be paid over the HMRC for quite some time, depending upon when you decide to start trading and what accounting date you select - so do set aside money for this in a separate savings account and don't be tempted to dip into that if you run short at any time. Remember it is the taxman's money and not yours.
Over the years I have been in practice I have seen many people switch from paid to self-employement with great success - so if it feels right and you are sure the future is secure, go for it. Personally I could never work for anyone else ever again (well they probably wouldn't have me!!!)
If your job is covered by the construction industry scheme tax will be deducted at source so you will have little or no liability when you submit your return. The actual deduction is 20% of earnings and you must pay your monthly Class 2 stamp. Your actual liability will be calculated after the returns have been submitted and in most cases there is actually a rebate and no further tax or Class 4 NIC is payable.
I will like to add an experience of one of my own close friends who got self employed and he was doing very well. He was happy with his self employment and he was discussing it with his IP also. So he used to pay the taxes and still he was going well with self employment.
I have been self employed for on and off for 25 years
as I am finding out to my cost payment protection is not worth the paper it is written on if your self employed especialy if you don't have an accountant.
from my experience It can sometimes be difficult to get credit if your self employed
also you have to be very carefull if you only work for one client and supply no tools, transport or materials then you are not self employed as classed by HMRC.
has Michael Peoples said if your working in constuction the contractor will varify with HMRC that you are registered for the CIS scheme and deductions of 20% will be made against each invoice you raise but be aware not all construction work is liable for this deduction but you are liable for your class 2 N.I
Once you have completed a self assesment tax return the HMRC will write to you and confirm what your tax liablity will be you will have to pay this by the 31st January every year along with the 1st installment on account then the second installment on account will be due by the 30th June every year
You do not need an accountant if you turn over below £1,000,000 but you do have to keep accurate records for upto 6 years.
