Employed or Self-Employed

[donnamh]

I have been unemployed for 11 months. My former employer has offered me some consultancy work starting in April 2010 for a couple of months (maybe longer) paid at an hourly rate. Would I be better to register as self-employed for the period in which I carry out this work? Most of it will be undertaken at home and I should like to be able to a) defer any tax payable on the income 2.) claim any expenditure connected with the work (proportion of internet, phone calls, stationery etc.) against tax. I will not have received any income for the tax year 2010 - 2011 at the time I start this work (save a small amount of investment income) as my Job Seekers allowance was contribution-based only and ceased after six months.

Any advice very welcome!

[tamborine]

no....dont register as SE till you've received at least 1y income. You may not be happy with the consultancy work.

[buildersmate]

You must register with HMRC within 3 months of starting SE or face the prospect of a penalty for not doing so.
Apart from being able to offset the expenditure wholly attributable to the work (including that you don't have to pay commuting costs if you work from home), there isn't too much difference in what you end up paying in tax and NI, compared to being an employee.
Make sure that pay rate you are offered factors in enough for employers' NI, and benefits not paid by the employer. In other words, don't get sold short.

[bednobs]

also don't forget that if you go self employed, you will probably be paying a different amount of contributions, ewffectively barring you from JSA in the future