May Contractor News Round Up
Your monthly round-up of May’s top contractor news.
There are so many information sites for Freelancers and Contractors (see our Top 10 sites for freelance and contractor news post) and sometimes there just aren’t enough hours in the day to stay up to date with the latest news. So, we thought you might appreciate a monthly roundup from some of our favourite sites.
Youth entrepreneurship is soaring
New figures have shown, that despite what people may think or say about the youth of Britain, that many are trying to become productive members of society by going down the entrepreneurial route. Many are taking the option to become self-employed instead of waiting for the right job to be available for them.
The stats were found in a YouGov study, with 30% of those questioned saying that they would be self-employed in the future, whilst a quarter said they’d be their own boss within five years. If these young people followed through on their plans, then it would see an increase in 5% on top of those young workers who are currently self-employed.
Since 2008 the amount of young self-employed has risen by 71,000. This is obviously due to the lack of employment options for graduates. So it does make sense for them to try working for themselves which can only be good news for the economy
Umbrella companies are suffering from low usage from freelancers
According to new stats, only 15% of freelance workers are using payroll umbrella companies. There are thought to be around 1.6 million professional freelancers in the UK and so this new statistic means there are over 1.35 million who are not using an umbrella company to help them manage their earnings.
Main issues people had when surveyed were the costs associated when using an umbrella company and misunderstandings over the role and benefits from these types of companies.
Phil McDonald the Managing Director of Paraplus, who conducted the survey said, “These findings should be a wake-up call for the umbrella industry. It makes for tough reading that 26.5% of freelancers don’t understand exactly what an umbrella company does and 14.5% don’t even know that one could help them.”
Will the self-employed be re-categorised as employees?
The taxman now says that there are two situations in which individual LLP members will next year be treated as if they were employees and therefore liable to pay income tax.
There are two situations in which, from April 2014, LLP members will be treated as if they were employees of the LLP, who will then have to operate PAYE on payments to the member.
These are the two situations:
- On the assumption that the LLP is carried on as a partnership by two or more members of the LLP, the individual would be regarded as employed by the partnership by reference to the normal tests of employment. These deal with matters such as control, the requirement for personal service, financial risk, the ability to profit from sound management, and so on. In some cases it will be plain that the terms on which the ‘salaried member is engaged are indistinguishable from employment: in others (especially in ‘eat what you kill’ partnerships) it may be very easy to show that relationship is not one of employment.
- Alternatively, HMRC proposes to treat a salaried member as an employee if he or she is not an employee under the first test but is nonetheless someone who:
- Has no significant economic risk (loss of capital or repayment of drawings) in the event that the LLP makes a loss or is wound up;
- Is not entitled to a significant share of the profits beyond the ‘fixed share’; and
- Is not entitled to any significant share of surplus assets arising on any winding-up of the LLP
That’s our May round-up of Freelancing news. If you have any comments or questions, leave a post below. We’d also love to hear from you if you have any other sites to recommend or regular features you’d be interested in reading.