Yes, you can! In the UK, it’s possible to be self-employed while holding a full-time job with a company. This dual approach can provide flexibility and financial opportunities but also entails considerations related to employment law, National Insurance contributions, and income tax implications. Understanding specific rules is vital for people who are self-employed and have a full-time job. This blog will explore the benefits, legal considerations, and methods to stay compliant with HMRC while self-employed but working for one company UK.
What Does It Mean To Be Self-Employed But Working For One Company?
Working for a company but being self-employed can be a unique situation in the world of work. This means a self-employed individual works solely for one company regularly. This arrangement may involve providing services to the company as a contractor or freelancer rather than being a full-time employee. Regarding employment law purposes, this individual is not an employee of the company but a self-employed worker. This distinction is essential regarding tax law and other regulations that govern the relationship between self-employed workers and the companies they work for.
An example of this could be an operator who manages his own business but primarily works for a specific warehouse agency as a warehouse operator. While they have the flexibility and control over their work schedule and projects, they are still working for one main client or company.
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Employed Vs Self-Employed
When deciding between being employed or self-employed, there are several factors to consider. Below are key points to compare the two options:
| Employed | Self Employed |
|---|---|
| Working full-time for a company means that you are an employee of that company, with specific working hours and employer responsibilities. | If you're a self working employee, you have the flexibility to work for various clients or companies as a contractor or freelancer. |
| You only worked for the company and did not have to take responsibility for its success. There are automatic deductions for pension and national insurance from your salary. | Self-employed rules require you to manage your finances, including paying national insurance contributions and taxes. |
| When you are a full-time employee, this means you have certain benefits such as paid time off and sick leave. | You have the freedom to set your own working hours and rates, but you also need to actively market yourself and manage your own business. |
| Business cards might also be provided by the company for networking purposes. | Working self-employed for a company might allow you to benefit from the Construction Industry Scheme (CIS) if you work in the construction industry. |
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Benefits Of Being Both Employed And Self-Employed At The Same Time
Some of the benefits of being both an employee of a company and self-employed at the same time are:
Flexibility: You can work for an employer during the day and run a business as a self-employed contractor in the evening, giving you the flexibility to define your working hours.
Financial Stability: Having multiple methods of income can ensure a more stable financial situation. You can also benefit from employee benefits such as pensions and self-employed tax benefits.
Tax Advantages: Being an employee and working for yourself allows you to pay taxes in different ways, potentially reducing your overall tax liability. You can also claim expenses as a self-employed person and benefit from tax deductions.
Skills Development: Working for a company and being self-employed at the same time can help you develop a range of skills and experience in different working environments.
Legal Considerations For Self-Employment But Work For One Company
Employment Status:
If you are self-employed but work for one company, it is essential to determine your employment status for tax purposes. This can impact your tax payments and your entitlement to benefits such as sick pay.
IR35:
The IR35 legislation is designed to prevent tax avoidance by individuals who work for one client but are treated as self-employed. It is essential to understand how IR35 may affect you if you work for a single company.
Employment Contract:
Even if you are self-employed for tax purposes, you may still have an employment contract with the company you work for. This contract can define your working arrangements and responsibilities.
Self-Assessment:
As a self-employed individual, you will be responsible for paying taxes and (NIC) national insurance contributions. You may need to file a self-assessment tax return each year to report your income and expenses.
Staying Tax Compliant With HMRC When Employed And Self-Employed At The Same Time
Being both employed and self-employed simultaneously can be a complex tax situation to navigate. Here are some key points to keep in mind to ensure you stay tax-compliant:
Understand the Difference: It’s essential to differentiate between being employed for tax purposes and self-employed. Employed individuals typically work full-time for a company and are subject to PAYE and Class 1 (NICs) National Insurance Contributions. On the other hand, self-employed individuals work for themselves and are responsible for paying their taxes through a self-assessment tax return.
Knowing HMRC Rules: If you are working for someone on a self-employed basis but have a close working relationship with a single client, HMRC may consider you to be “inside IR35.” This means you may be classed as employed for tax and NICs purposes, even though you are technically self-employed.
Knowing the Tax Position: It’s essential to understand how your tax position is affected by working for a company but being self-employed. Make sure to complete a self-assessment tax return and accurately declare the income you have earned through self-employment.
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