Benefits and Disadvantages of Being Registered as Self Employed
With the new laws in place, the HMRC can easily claim that you are an employee rather than self employed. If this happens to you, it is not necessarily all bad. However, there are many advantages to being registered as a self employed person, so you should do so if you can. The biggest benefits of being registered as self employed is that you do not have to pay income taxes, this being the reason that so many self employed persons are now being forced to be considered as employees on tax self assessment. Self employed persons only collect and pay VAT taxes on their taxable supplies. Profits are distributed as dividends, on which no income taxes are charged.
However, being self employed has disadvantages as well. If you are self employed, and working on someone else’s property, you are not covered by their health and safety programs. You also do not receive other benefits and protections that are offered to employed persons. Additionally, while your taxes will be higher, they are deducted from your pay and sent into HMRC by your employer. This scenario means that you do not have to keep vast records or make monthly payments to cover VAT taxes. Employees also do not have to worry as much about tax enquiry insurance with IR35 cover. Still, there are many more advantages than disadvantages to working for yourself. If you really want to be self employed, check with your local tax consultancy firm to see if you can register as a self employed person.