Ipse: Rise in self-employed good for the UK

Monday 30 January 2017

All eyes are on the British economy at the moment as businesses of all sizes exercise caution as industries make predictions regarding Brexit and try to work out how they can prosper in the changing climate. 

The Association of Independent Professionals and the Self-Employed (Ipse) commented on the latest figures from the Office for National Statistics (ONS), which show the number of self-employed people in the UK increased by 133,000 to 4.77 million in the three months to November. 

Lorence Nye, Ipse economic policy adviser, said: “We’re seeing a prolonged trend of more and more people taking the leap and becoming their own boss, and more companies seeing the value of freelance talent.

“That’s a good thing for the labour market. Roughly half of the UK’s self-employed are the highly skilled professionals ensuring we remain one of the world’s most flexible, knowledge-based economies.”

Mr Nye went on to say that self-employed workers can help businesses to manage work during times of high demand, particularly in the current climate of uncertainty. 

He explained that the changing nature of the labour market underlines the importance of Matthew Taylor’s review of modern employment practices. 

“We hope it creates a better understanding of the new ways people are working – and how employment status and tax legislation can reflect them,” Mr Nye noted. 

As more people understand the benefits of operating freelance, it will be interesting to see if the popularity of contracted work continues in the coming years. 

When it comes to tax, you can choose when your accounting year starts and ends, so pick one that gives you the required time to work out your accounts and time pension contributions so your tax bill is managed properly. 

In your first year, you are taxed on profits from the your start date to the end of the tax year, though this may not be a full 12 months. In the second year, profits will be taxed for 12 months to the accounting date in the tax year. 

Following this, your accounting year will normally cover a year and your tax bill will be based on the profits you made during the accounting year ending during the tax year. 

However, not everyone who is self-employed has to make payments on account. Those who owe £1,000 or less just need to make a single payment by the following January 31st. The same rule also stands if over 80 per cent of your tax bill was paid through PAYE. 

By Victoria McDonnell

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