freelance?
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Join Date: Jan 2010
Location: UK
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freelance?
do you pay your all your own tax ( after expenses!) at the end of the year, or does a club deduct tax and pay you a nominal net figure, leaving you to claim expenses back from the inland revenue at the end of the year?
I only do a bit of instructing, but have yet to meet any school interested in getting involved in my tax affairs. They pay me, and leave me to manage anything to do with HMRC myself.
G
G
As a self employed instructor you issue an invoice for your services. Each invoice to contain a unique number and the date of issue. Remember, to maintain your self employed status, you choose when to work and you must have at least two clients. Save copies of all your invoices and tell HMRC you need tax return status.
I'm now going to hide behind an arrow proof barricade................
I'm now going to hide behind an arrow proof barricade................
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thanks, i put in a bill to a new club, and they paid me 20% less, i shall now ask them why, politely of course!
on the tax return, claim for petrol? medicals? recurrent training courses? flight tests?
imc renewal costs?
on the tax return, claim for petrol? medicals? recurrent training courses? flight tests?
imc renewal costs?
Join Date: Sep 2004
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Look here:
https://www.gov.uk/what-you-must-do-...payment-status
I know this is for the building industry, but I believe it also applies elsewhere.
If you're a self-employed contractor, you need to jump through some hoops before you can avoid having 20% deducted.
Personally, I have a limited company from which I issue invoices. These are paid gross, then I do a tax return including a CT600 (Corporation Tax). I usually combine this with the Companies House return, which makes the process relatively painless.
https://www.gov.uk/what-you-must-do-...payment-status
I know this is for the building industry, but I believe it also applies elsewhere.
If you're a self-employed contractor, you need to jump through some hoops before you can avoid having 20% deducted.
Personally, I have a limited company from which I issue invoices. These are paid gross, then I do a tax return including a CT600 (Corporation Tax). I usually combine this with the Companies House return, which makes the process relatively painless.
Last edited by TheOddOne; 17th May 2017 at 08:11. Reason: typo
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It used to be the case if you only work for one organisation you were not self employed The HMRC had six qualifying rules to be self employed, but I have a feeling these have been relaxed. Also note 'theoddone', I have a feeling the link the the CIS, only really applies to the construction, I get the feeling it was an attempt to crackdown on the contruction industry. The sole trader status (self employment), I think is different from the CIS scheme.
I would say that most instructors would be better off self employed, unless the club cover the cost of renewals, medicals, etc. If are self employed you can deduct all expenses (medical, renewal, miliage or fuel to work). One difficulty with self emplyment is that if you were to have an accident, I would imagine the FI might be deemed liable by the club which most probably has limited company status. The solution here might be for the instuctor to register as a limited company, it can be done online for £15.00. This might protect the home and family. I think what happened to the Farage towing pilot. If there are any laywers on here, perhaps they can advise if this is correct.
If your a part time self employed instructor with a full time job, and say in you pay £7000 on a FI course, earn £2000 from instruction, so loss of £5000, I think you can offset that agains your taxable income. Infact, I would imagine quite a few part time instructors, could make a technical loss year on year.
Note that I am not an accountant so feel free to correct me.
One final point that I was going to flag up, is class one or class two medical. My take on this is that if there is no renuration then you can operate on a class two, which is quite a saving. So if your expenses are say £1500, income from instruction £1499, they you have really made a loss of £1, but had some fun from instruction. By expenses, I mean car running costs, teaching aids, pens, medicals, paperclips, renewals, additional ratings, % of domestic bills, flying clothing, PPE, sunglasses, the list is endless. The other thing to consider is being VAT registered, as it makes no difference to the school and you can claim VAT back on your expenses. VAT registration is not difficult, and you can manage it on Excel easily. Don't opt for the fixed rate which tradesmen use as they are afraid of paperwork and spreadsheets.
So if your not making a profit from part time instructing is that deemed renumeration, just covering expenses, it would be interesting to know if this is deemed non numeration hence you can fly on a class two medical. Any ideas.
Please if you are considering any of the above get professional advice from HMRC or CAA and get it in writing. Do nor depend on goverment advice lines, as like the CAA they often do not know what they are talking about. I remember being advised on the phone from HMRC, that I needed to charge VAT for goods and services supplied in Switzerland. the HMRC advisor, was convinced that Switzerland was in the EU!!!!!
I would say that most instructors would be better off self employed, unless the club cover the cost of renewals, medicals, etc. If are self employed you can deduct all expenses (medical, renewal, miliage or fuel to work). One difficulty with self emplyment is that if you were to have an accident, I would imagine the FI might be deemed liable by the club which most probably has limited company status. The solution here might be for the instuctor to register as a limited company, it can be done online for £15.00. This might protect the home and family. I think what happened to the Farage towing pilot. If there are any laywers on here, perhaps they can advise if this is correct.
If your a part time self employed instructor with a full time job, and say in you pay £7000 on a FI course, earn £2000 from instruction, so loss of £5000, I think you can offset that agains your taxable income. Infact, I would imagine quite a few part time instructors, could make a technical loss year on year.
Note that I am not an accountant so feel free to correct me.
One final point that I was going to flag up, is class one or class two medical. My take on this is that if there is no renuration then you can operate on a class two, which is quite a saving. So if your expenses are say £1500, income from instruction £1499, they you have really made a loss of £1, but had some fun from instruction. By expenses, I mean car running costs, teaching aids, pens, medicals, paperclips, renewals, additional ratings, % of domestic bills, flying clothing, PPE, sunglasses, the list is endless. The other thing to consider is being VAT registered, as it makes no difference to the school and you can claim VAT back on your expenses. VAT registration is not difficult, and you can manage it on Excel easily. Don't opt for the fixed rate which tradesmen use as they are afraid of paperwork and spreadsheets.
So if your not making a profit from part time instructing is that deemed renumeration, just covering expenses, it would be interesting to know if this is deemed non numeration hence you can fly on a class two medical. Any ideas.
Please if you are considering any of the above get professional advice from HMRC or CAA and get it in writing. Do nor depend on goverment advice lines, as like the CAA they often do not know what they are talking about. I remember being advised on the phone from HMRC, that I needed to charge VAT for goods and services supplied in Switzerland. the HMRC advisor, was convinced that Switzerland was in the EU!!!!!
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I only instruct part time and after renewals, travel and other expenses normally make a small loss but occasionally am in profit, I just put a note on explaining that as it sometimes makes a profit I am including it in my return (as I should) but that this is more a hobby than a job intended to make an income, always been accepted up to now.
Unless there's been a change that I am unaware during the past 10 years, HMRC will only allow expenses for maintaining licences and ratings - not the training costs for initial issue.
Instructor liability insurance is available through AOPA.
Instructor liability insurance is available through AOPA.
it would be interesting to know if this is deemed non numeration hence you can fly on a class two medical
The use of an accountant will save you more than they cost!
