Interesting thread.
I have had primarily self-employed income since 1989 with sometimes associated 'employed' income through associated businesses.
Some disadvantages of self-employment not mentioned include:
- Reduced control over your income level and tax (compared to establishing yourself as a 'company')
- Reduced potential for pension contributions, limited to 100% of taxable income with no opportunity for employer contributions subject to annual allowance. Carry forward of unused allowance now being introduced which will help a bit, but still limited compared to employees.
- Reduced State Pension. The State Second Pension is paid only to employees and is disproportionally helpful to a low paid employee paid at just over the NI threshold. Whether low paid or not self employed individuals do not qualify for S2P at all.
- You are left to yourself to provide for your pension and your own sick pay
- Mortgages can be more difficult to obtain. On one hand you want your accountant to minimise your tax bill but in doing so your borrowing capacity is reduced. Self-Cert or non-status terms do not help any more.
But on the plus side:
- More freedom
- Depending on the type of business you have you might be able to build up a value that will help in retirement as you could sell it.
Me - I would never go to work for someone else, I would be unemployable, too independent and would soon be telling the boss how he should run his business, as I will have done it better...
