Self Employed but working a 3 month Employed Contract?

Gavin UK

Free Member
May 23, 2012
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Hi all,

Some advice would be hugely appreciated.

I'm currently working as self employed as a music teacher. Self assessment April to April. Accounts due April 2013.

However, I have been offered a full time employed contract for 3 months.

During this time I will be working solely as employed until the end of March 2013 and will then resume self employment.

The agency I'll be working for as employed til the end of March need P46 details etc of taxable income to date.

Can anyone advise on the best way to work this? Should I cancel self employment for 3 months with HMRC?

Is it best to keep both and they run parallel?

How do I declare earnings to date? Make an estimate from my self employed accounts?

Many thanks in advance
Gavin
 

Scalloway

Free Member
Jun 6, 2010
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Your self employment will cobntinue to the end of the tax year. When you do your tax return you will complete both Self Employment and Employment pages. You tax payable will be calculated on the basis of both. Tax deducted from employment income will be deducted from the sum you have to pay for all income received in the year.
 
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MrAnchovy

Free Member
Dec 29, 2010
237
45
The agency I'll be working for as employed til the end of March need P46 details etc of taxable income to date.

No details of income or tax to date go on a P46, and even if they did it would only be PAYE income not self employed. Are you sure they are not asking for a P45? Tell them you don't have a P45 because you are self employed.

Should I cancel self employment for 3 months with HMRC?

This is not really possible, or desireable. As Scalloway says, you tax return will tie up the loose ends.
 
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paulears

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Jan 7, 2015
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That's the rub - if you have self employed income, then it's class 2 and 4 on the profits and class 1 on your paye income. Nothing you can do if the employer has had one of the instructions from HMRC - For some categories of work, any period of work over 4 days is considered a permanent place of employment, and even travel expenses will be subject to NI. It's spreading. Not every area by a long way, but I expect it to get worse. This means as a self-employed and VAT registered person I submit an invoice, add VAT and then get the national Insurance contributions removed from the 'pay'. I am classed as an employee for NI and self-employed for tax. It's very confusing, but clear cut after ITV took it to the High Court and lost! My accountant hasn't found any way I can avoid this - so it's rather like having a 10% cut in my job rate - and also makes book-keeping tricky as your invoices don't get cleared by the payments you receive!
 
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MrAnchovy

Free Member
Dec 29, 2010
237
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I am classed as an employee for NI and self-employed for tax. It's very confusing, but clear cut after ITV took it to the High Court and lost! My accountant hasn't found any way I can avoid this - so it's rather like having a 10% cut in my job rate - and also makes book-keeping tricky as your invoices don't get cleared by the payments you receive!

This should not be happening any more - the regulations that imposed this ridiculous arrangement were repealed in April - see here. Note however that it is possible that the organisation you work for may have moved you fully on to PAYE as an employee.
 
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paulears

Free Member
Jan 7, 2015
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Suffolk - UK
Sadly, as a result of the ITV v HMRC case certain types of employment have been confirmed as falling under this requirement - which as far as I'm aware is being gradually extended as new contracts are issues. Production companies who use actors, singers, dancers and musicians are now for the first time deducting class 1 NI contributions and making the employers contributions for people working in theatre, television and the events industry. Their travel is also subject to the deductions - where in the past getting to the job was considered essential and fully reimbursed. It impacts heavily on people who tour - as each week it is common for a production to move to a new address. One-night events seem ok, as the individual venues are not considered places of permanent employment, but a weeks residence is! Some very large production companies who were informed four years ago that their own method of work was exempt have now been told this was incorrect information and have been hit with huge back NI payments for people who have been long gone. This first impacted on me last year, but this year was extended to the musicians who I'm in charge of - their own union have also confirmed to their members that these deductions are correct, as have Equity and BECTU. The only way to avoid it is to provide your services through a Limited Company - which is the only way the production company will be able pay in full without the NI component - but few people in my position trade this way as it is not advantageous to our particular way of working.
 
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MrAnchovy

Free Member
Dec 29, 2010
237
45
Sadly, as a result of the ITV v HMRC case certain types of employment have been confirmed as falling under this requirement - which as far as I'm aware is being gradually extended as new contracts are issues. Production companies who use actors, singers, dancers and musicians are now for the first time deducting class 1 NI contributions and making the employers contributions for people working in theatre, television and the events industry. Their travel is also subject to the deductions - where in the past getting to the job was considered essential and fully reimbursed. It impacts heavily on people who tour - as each week it is common for a production to move to a new address. One-night events seem ok, as the individual venues are not considered places of permanent employment, but a weeks residence is! Some very large production companies who were informed four years ago that their own method of work was exempt have now been told this was incorrect information and have been hit with huge back NI payments for people who have been long gone. This first impacted on me last year, but this year was extended to the musicians who I'm in charge of - their own union have also confirmed to their members that these deductions are correct, as have Equity and BECTU. The only way to avoid it is to provide your services through a Limited Company - which is the only way the production company will be able pay in full without the NI component - but few people in my position trade this way as it is not advantageous to our particular way of working.

Ah sorry, I should have said that the regulations that imposed this ridiculous arrangement on engagements by educational institutions was repealed in April. As the OP referred to music tuition I made an assumption which as you referred to the ITV Services case is obviously not valid in your case. Entertainers are a whole different kettle of fish and HMRC's persistence, carried over from when National Insurance was the responsibility of the predecessor of the DWP, in inventing and applying unnatural definitions simply in order to collect more tax from them is IMHO indefensible and possibly unlawful.
 
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