Guide to Working on a Self Employed Basis
A person who is self employed works for himself, not for a person or company.
Being self-employed allows you to take control of how much income you make each month, when and where you work, how you work, how many hours you work and who you work with. It brings with it a flexibility that is not available to employees.
However, it also brings with it certain requirements that do not generally concern employed people. Whilst it is your responsibility to ensure that you meet these requirements, EVS has prepared this brief guide to being self-employed to assist you in identifying the issues you will need to think about.
As a self-employed person, you can choose whether or not to accept any valeting jobs that are offered to you. Just as EVS is not obliged to offer you work, so you are not obliged to accept any work that is offered.
You also have the freedom to arrange for others to do or help with any jobs that you do agree to do. You can do this at any time, but it may be particularly useful where you have already agreed to do a job but then cannot make it. Of course, it will be for you and your substitute/helper to come to an agreement between yourselves as to how the fee paid by EVS for this work is shared between you.
As a self employed contractor you won’t be paid at a fixed hourly or weekly rate. The only payments that will be made to you are the rates agreed for each job. As a result you need to work out what rate you will be prepared to do a job for, and be prepared to negotiate to achieve a rate that is agreeable to both parties.
When setting/negotiating rates you need to bear in mind that as a self employed contractor you will not receive payment for holiday or any payments to cover periods of sick leave. You will also need to take into account:
- other costs related to the provision of the services, for example materials
- costs related to operating on a self employed basis, for example the cost of accountancy services and insurance cover; and
- the fact that you will be expected to put right any problems – which could involve re-valeting a car, or paying for any damage or insurance excess, at your own cost.
You must register as self-employed with HMRC within three months of starting trading, even if you already pay tax via the self assessment process each year.
As a self-employed individual you are responsible for paying tax. If you have not already done so, you should, as a first step, contact HMRC to register as self-employed. You can do this online at https://online.hmrc.gov.uk/shortforms/form/CWF1PT?dept-name=CWF1&sub-dept-name=&location=40&origin=http://www.hmrc.gov.uk or call 0845 915 4515.
You will be required to pay Income Tax on your profits in a particular tax year (6th April to 5th April). This is assessed by filling in a self assessment tax return, either in paper form or online. You may have to pay a penalty if you do not submit your tax return by the deadline (31st October in the year the tax year ended for paper forms, 31st January the following year for online forms). Any tax due will be payable by 31st January the year following the end of the tax year, and additional charges and interest may be payable if you pay late.
You will also need to pay National Insurance. This consists of fixed monthly contributions plus an amount based on your profits, assessed and paid at the same time as Income Tax.
You may also wish to register voluntarily for VAT. This is compulsory if your business’ annual income exceeds a set level – please see http://www.hmrc.gov.uk/vat/forms-rates/rates/rates-thresholds.htm#2 for the current level.
It is very important that, for tax purposes, you keep records of your income and expenses and retain documents such as bank statements. You may want to have a separate business bank account so that it is easier to show what income and expenditure relates to your business. Records should generally be kept for a period of 6 years.
You may need the advice of an accountant on completing your tax return and on any tax reliefs and allowances which may be available to you.
You are responsible for arranging insurance to cover the risk of any claims arising out of the provision of your services, including for example, any damage you cause to vehicles in carrying out the valeting services.
Insurance can be purchased from EVS at an agreed rate.
Alternatively, you may wish to contact an insurance broker to discuss arranging appropriate insurance cover direct, and this is something we would encourage you to do. One broker you may wish to contact is Todd & Cue – please see www.toddcue.co.uk.
Please remember that you will be responsible for paying any excess on any insurance policy.
As a self-employed valetor, you will need to provide the chemicals and materials that you use in providing the services.
In order to provide clients with a quality service we do expect quality products to be used. You will be required to use chemicals and cleaning products approved by EVS. A list of all approved products is available at each of the sites we operate from.
Alternatively, you can buy the materials and chemicals from EVS.
- Advice on how to set-up a business www.businessstartupsouthwest.co.uk
- Professional advice from an accountant (www.icaewfirms.co.uk/business/index.php) or solicitor (www.lawsociety.org.uk/choosingandusing/findasolicitor.law).
- The HMRC Self-Employment website (www.hmrc.gov.uk/selfemployed) contains extensive guidance on tax issues for self-employed people.
- The Citizens Advice Bureau provides free advice on self-employment issues, including an online self-employment checklist (http://www.adviceguide.org.uk/index/your_money/employment/self-employment_checklist.htm). You can also visit your local Citizens Advice Bureau office (find your nearest at www.citizensadvice.org.uk ), or phone 08444 111 444 (in England) or 0844 477 2020 (in Wales).