To Be Employed or Self Employed? It’s a common question.
Joy Shaw, Senior Tax Adviser explores what you’ll need to consider if you’re thinking about becoming self- employed specifically within the construction sector.
The employed role Imagine you’re a bricklayer, carpenter, or general builder. You enjoy your job, working outside (and hopefully inside in the worst weather), and you’re employed by a small family business. And every week (or month) you receive your wages, with tax and national insurance deducted at source, so the net wages are yours to spend as you require. Your employer contributes to your pension, and you can too, but your employer makes all the arrangements, although you may need to claim higher rate tax relief yourself.
Perhaps your employer provides you with a company van, and if you use this just for work, and commuting home to site, (any private use being very insignificant), you’re not taxed on the van. Alternatively, if you have private use of a van, and can fill the vehicle up with fuel at work for private journeys, your employer will arrange for you to be taxed on this. For next tax year, 2025/26 you would be taxed on £4,020 van benefit and £769 fuel benefit.
If you’re a basic rate tax payer, you’ll pay 20% tax on the benefits, or if you are a higher rate tax payer (because your wages including the benefit and other income exceed just over £50,000) you will pay 40% tax on the benefits. As you’re employed, your employer probably provides all the tools you need and reimburses you for business expenses, but if you do incur expenses that are incurred “wholly, exclusively and necessarily” in the performance of your employment, (that your employer does not reimburse), if you have kept invoices and receipts, you can make a claim for tax relief from HMRC.
6 | SCRUTTON BLAND | P R O P E R T Y A N D CONSTRUCTION
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