Starting out

[Capt BK]

Morning everyone,

I've just started my FI course and already had a couple of job offers, all on a self-employed basis. I've done a search and found loads of great advice on tax/NI etc but the daft thing is I really dont have a clue about how to actually become self employed. A few dumb questions if I may...

Presumably I have to become registered as self employed but with who?
I've had a few reccommendations for an accountant but is there anything else I need to consider? Is it worth contacting people now while i'm still training or shall I wait until i've finished?

I know some of this probably seems a bit daft but i'm used to just getting a job and money appearing in my bank account!

Any advice for someone looking a bit lost?

CBK

[flugalrascal]

Definitely speak to an accountant, you may find that the cost of your FI course is tax deductable as technically it is expenses incurred in order for you to set yourself up in business...

I am planning to start FI training in New Year, may I ask where abouts you are training?

[Johe02]

Capt BK

Just tell the tax office what date you wiil become self employed get an accountant and off you go. . .

Good luck

:ok:

['I' in the sky]

Also you are required to let them know within 90 days of starting 'work' that you are self employed otherwise they charge you a £100 penalty.

I just left the whole lot until the the end of the first tax year, requested the tax self assesment forms etc and was then told I should have registered as self employed much sooner. I asked how I was supposed to know this as I'd never been self employed before but it cut no ice.

Being self employed has its advantages and disadvantages, the biggest disadvantage is that you are possibly not covered by the employers liability insurance. I would certainly look into this in much more detail before I considered working on a self employed basis again.

[18greens]

Definately look at liability insurance, or fly for a company that has it.

If you don't, don't take any Lawyers or Barristers flying.

Does anyone know how much it costs?

[aces low]

Most banks will do an info pack for self-employed, as will local business links.

I have been self employed for 8 years and it really is not as difficult as it sounds. The only catch is that you need to work for at least 2 schools/clubs to genuinely qualify as self-employed...otherwise you are just participating in NI avoidance fraud. Try a search on this (and minimum wage) as I am sure it was covered on pprune a couple of years ago.

[Capt BK]

Thanks for the reply’s,

I'll definitely look into the insurance issue, I don't really want to be paying for it myself due to the crap wages but I suppose you have to get what you’re given. Any idea what it costs?

Do you know I never even thought of going into my bank for info, another port of call:) Talking of banks, I’m guessing I don't need a separate account, is that right?

I suppose I might as well tell the tax office now that I’m self-employed, even though I’m not yet working and still training. I don’t suppose it will do any harm. An accountant is first on the list though; I will make some calls this week.

Thanks for your help.

CBK

[Vortex Thing]

Try looking through business link or click government startups website (http://www.startups.co.uk)

I was self employed as an instructor for some schools and employed for others so have done both. Would also suggest a quick look here (http://www.dwp.gov.uk/index_content.asp) .

Of particular importance is to have a look at what IR35 is and means to you and take professional advice before deciding whether to form a limited company and employ yourself under schedule E or be self employed under schedule D tax regs.

The issues are not complex but you must put yourself in a positon of strength when dealing with tax as the government are fairly inflexible when it comes to money that you should have paid and ignorance is no excuse also the clubs/schools that you teach for are probably forcing you to go self employed as it is in thier interests rather than yours. This is due to issues such as employees insurance liability, etc I solved most of my problems by marrying an accountant but PM me if any issues come up that I can help briefly with.

Bonne chance

[Whirlygig]

You can also consider VAT registration if you have not already done so and reclaim the VAT on your training. You will have to charge VAT on your invoice as self-employed instructor (whether as sole trader or ltd company).

www.hmce.gov.uk - and download the forms for HM Customs & Excise.

There is nothing particularly complex in VAT or taxation (or Company Law for that matter) - if you can pass your ATPL exams, you can understand the concepts behind tax! There are rules and both the Inland Revenue and Customs & Excise are helpful when people are starting out.

Cheers

Whirlygig

PS - you don't NEED a separate bank account to be self-employed, although you should for a limited company but, if you don't have a separate account, you have to be meticulous in keeping your records.

[homeguard]

Capt BK

You can make all this simple or complicated.

The decision as to whether you may work self employed at a school or not is generally left to the local tax office to decide, which is what makes life so complicated in discussing the issue. However as long as you keep detailed records of you income and declare it fully together with your expences you will not have a problem. Most tax offices accept Flying Instructors subject to Schedule 'D' status owing to the vagaries of the earnings. However the tests applied in law to establish employed v self employed are complex. It would be unlikely that a Flying Instructor could in the normal school environment prove actual self employed status. Although as I have said most tax offices accept the reality that exists.

Different from what has been said so far the risk is greater for the flying school than you. The law is simple. Should no tax be deducted from your earnings when it should be then the school will be required retrospectively to pay your tax and NIC. Most employers liabilty insurance covers Flying Instructors retained by them. Your tax status is irrelevant. Public liabilty held by the school also applies.

Should you wish to be completely self employed as an individual aside from any flying school then you enter the real world. The £10-15 per hour paid by most schools will appear very reasonable and the apparent mark up by the school over the actual cost of the aircraft operation will seem meagre when all the issues are taken into account.

Owners of aircraft wishing to retain you individually will not want to pay you more that the school will pay you. Add the cost of Employers Liabilty and Public Liabilty Insurance to your costs and it will mean that you will no cheaper than what the average school charges. These columns are littered with such examples; in the main insurance companies, it would seem, are not prepared to insure an individual Flying Instructor working outside of an actual structured organisation.

[mysteryshopper]

Please can any self employed instructors with public liabilty insurance policies let me know which company/broker they managed to get cover from?

Thanks in advance,

Mystery Shopper