Self-Employment FAQ

If you're self-employed or a sole trader, legally you must keep records of your income (and any capital gains) for at least five years and ten months after the end of the tax year.

Learn how to understand your accounts here.

You need to fill out a tax return if you:

• are self-employed
• are in a business partnership
• have income from land and property
• are a director
• incur taxable capital gains
• are sent one

If you're in any doubt, contact your local Tax Office and get HMRC to confirm whether you should fill out a tax return.

Find the answers to your tax questions here.

If you are self-employed, while you will be paying into your state pension by means of your National Insurance contributions (assuming you are paying them) you won't have any other pension scheme available unless you are paying into one. You are strongly advised to consult an independent financial adviser to set you up with a scheme most suitable for you.

Find out all about self-employment and becoming self-employed.

Stakeholder Pensions are low-cost private pensions, available from 6 April 2001. They are meant for people who currently don't have a good range of pension options available, so they can save for their retirement.

If you earn more than £30,000 per year and are in a company pension scheme, you cannot take out a Stakeholder Pension as well. However, everyone else can have a Stakeholder Pension, even non-taxpayers, non-earners and children.

Contribution limits are based on earnings, but even if you don't have any earnings, you can pay up to £2,808 into a Stakeholder Pension and this will be topped up to £3,600 by the Government.

Employers with more than five employees have to provide access to Stakeholder Pensions with effect from 6 October 2001.

There are plenty of options, depending on whether you are happy to go it alone or would prefer the help of a financial expert.

• Buy direct from the company - if you know what you want, you can ring their call centre or talk to a company sales adviser; however, they will only be able to talk about their own product range.
• Go to your own bank or building society - again, they will only be able to talk to you either about their own products or those of one particular insurance company with whom they are affiliated.
• Seek advice from an Independent Financial Adviser (IFA) - if you're not sure what you want, Independent Financial Advisers (IFAs) are able to look at the whole market and advise on the most suitable product for your needs. For this they will either be paid a commission or charge you a fee and this will be agreed at the initial meeting, which is often free. Independent Financial Advisers (IFAs) are regulated by the Financial Services Authority (FSA).
• Buy through the internet - there are hundreds of personal finance sites and obtaining information is now easier than ever. That said it can be overwhelming.
• Use a discount broker - if you know exactly what you want, you can save money through a discount or 'execution only' transaction by not asking for advice. What happens is that you buy the product and the broker refunds a proportion of the commission into your plan.
• Select a product offered by a non-financial company - you can buy your financial products from many of the big supermarkets and store groups nowadays by phoning or logging on to a specialist website.

If HM Revenue & Customs says that you owe them money for a particular tax year, you may be able to get these arrears waived or appeal if this request is refused. This will be possible if (a) they had all the information they needed to make a decision; (b) by the time they let you know more than 12 months had gone by since the end of that tax year (in exceptional circumstances they may waive if it is less than 12 months); and (c) you reasonably believed your tax affairs were in order. You can also get arrears waived if the tax office paid you too much tax rebate, then tried to reclaim it after the end of the tax year. When you claim, say you are doing it under Extra Statutory Concession A19.

Find out how you can pay less tax this year.

If you're being pursued by a creditor for an old debt, you may be able to ignore it on the ground that it has time-lapsed. This is six years, except in Scotland where it's five, but this only applies if no legal action has been taken against you on the debt, and you have not acknowledged it during the time. If you do now acknowledge it as a result of the creditor contacting you, you will reactivate the debt, so take advice before doing anything.

All chartered accountants are members of the Institute of Chartered Accountants, who will assess your complaint to decide whether conciliation is appropriate or alternatively, carry out an investigation.

Other accountants may be members of the Association of Chartered Certified Accountants, the Chartered Institute of Management Accountants, or the Chartered Institute of Public Finance Accountants. Book-keepers may belong to the Institute of Chartered Secretaries. All of these bodies will investigate and may take disciplinary action against the accountant if your complaint is upheld.

Need to find an accountant? Get a free initial meeting with TaxAssist Accountants.

There are various methods of funding a legal case used by solicitors:

• Charging by the hour: This is the most common method of charging. Hourly rates vary from high street firms where you can expect to pay somewhere between £80 to £120 an hour for advice on private and commercial work, all the way through to £350 an hour for a senior partner in a City firm for extremely expert advice on complex points of commercial law.
  
  
• Fixed fees: This form of payment has the obvious appeal of limiting your liability for legal costs and, after the hourly rate, it's the next most common way of charging. The obvious downside is that if your case concludes quickly, then you will end up paying more than you may have on the hourly rate basis.
  
  
• No win, no fee: 'No win, no fee' is a deceptively simple expression. On one level - and as the name implies - solicitors are paid nothing for their work if they lose, but it also covers agreements whereby solicitors can charge more if they are successful.
  
  
• Legal Aid/the Community Legal Service: To be eligible for Legal Aid, you have to show that you cannot pay for your case (i.e. that you are financially eligible) and that you have a sufficiently strong case that you are likely to win. Even if you're working, own your home and have savings, you may still qualify. However, you may well have to pay a contribution towards the cost of taking your case to court.

Yes, from October 2004 they have applied to all employers.

Find out more about employment law.

Written terms and conditions (employment contracts) must be provided if you employ people for more than a month.

Find out more about employment law.

In principle, you are liable to Capital Gains Tax in respect of any assets used in your business. However, if further business assets are purchased within one year before or three years after the sale, you can claim 'rollover relief' as a result of which the gain on the disposal is deducted from the cost of the new business assets acquired. Therefore, no tax is paid until the new business assets are sold, unless they too are replaced. For these assets to qualify they must either be land and buildings, fixed plant and machinery, milk and potato quota or other agricultural quotas. Please note that motor vehicles or any vehicle on wheels don't qualify.

Find out more about tax and your business.

In principle, it's illegal for a director to borrow money from their own company. Small expense sums are allowed to be borrowed in advance, but if a substantial sum is borrowed, not only does tax have to be paid on the sum borrowed (this sum is repaid by the Inland Revenue when the loan is repaid), but in addition, interest has to be paid on the beneficial effect of enjoying what is normally an interest-free loan. The short answer to this question is 'no'.

Find out more about self-employment and being self-employed.

To work out what percentage you can offset against tax you need to work out the area of your home that is taken up by your business. Apply this as a percentage. And there is your tax offset!

Find out more about working from home.

If you are an employee, so long as your employer agrees that you can work from home (and whether or not your employer provides you with equipment to carry out such work), you may be entitled to seek a reduction in council tax on the ground that the room you use as an office can no longer be used, for example as a bedroom.

It would be advisable for you not to hold business meetings at your home, because too many of those might constitute a change of use and cause other problems with your local council.

Find out more about working from home.

Your business rates depend on the space occupied by your business - contact your local authority for advice.

Find out more about self-employment.

If they are employed by you, then yes, you will need to use the PAYE system. If they remain self-employed, no.

Find out more about self-employment.

In principle, you can either pay yourself from your own company by a salary (which could be in the form of a bonus or other remuneration) or, so long as you hold shares in the company, you could pay yourself from your own company by a dividend.

If you are paid a salary from your own company, normal PAYE rules apply.

If you are paid a dividend, your company doesn't have to pay any tax over at the time of making the distribution. This is because dividends can only be paid out of profits which have already been taxed. In principle, dividends are now a more tax-efficient way of withdrawing profits from a company than salary.

If you have lent money to your company and that company wishes you to be able to withdraw some of that loan (to have it paid back), there would be no tax involved with any such repayment.

Find out more about the law and your business.

If you are self-employed you can claim tax-deductible expenses by completing the relevant parts of a tax return.

Find legal forms, advice and information on self-employment.

Yes, National Insurance is still payable if you are self-employed unless your profits are below a certain level. You need to register either way.

Find legal forms, advice and information on self-employment.

To register for self-employed National Insurance contributions you should contact your local National Insurance office, listed in your phone book.

Find legal forms, advice and information on self-employment.

You can tell HM Revenue & Customs that you are self-employed by completing and sending HM Revenue & Customs forms CWF1 and CA5601.

Find legal forms, advice and information on self-employment.

In order to comply with the law, you should provide the following:

1. The Health and Safety Law poster/leaflet
2. The location of first aiders and the first aid box
3. The location of the accident book
4. The health and safety policy document

Find out more about Health and Safety and your business in our Health & Safety at Work Essentials.

If you are starting a commercial or industrial business and are employing people, you're legally obliged to notify your local Health and Safety Executive (HSE) inspector or local authority.

If your business involves manufacturing or processing or providing a service such as dry cleaning or telephone repairs, ring the Health and Safety Executive's Infoline (tel. 0845 345 0055) and they will send you a Health and Safety form to complete.

If your business is a shop, office, restaurant, hotel, launderette or residential home, your local authority's environmental health department will send you a form.

If you are in doubt as to who to register with, telephone the Health and Safety Executive 's Infoline (tel. 0845 345 0055).

Find out more about Health and Safety and your business in Lawpack’s Health & Safety at Work Essentials.

For most new businesses, you must start adding VAT onto your business invoices when your turnover exceeds £67,000 a year (2008/09 figure).

Find legal forms, advice and information on Starting a Business.

Any catering or food business must register with its local authority's environmental health department at least 28 days before opening.

Find out more about working from home .