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Want to start a new career as a self-employed tradesman, but worried about matching your expectations to the reality? VHR’s Engineering Recruitment Specialist Gary Taylor reveals all.
Myth: Self-Employment Automatically Reduces Taxes
Fact: Whilst different employment statuses have historically enabled contractors and freelancers to benefit from lower taxes in exchange for a lack of rights such as holiday and sick pay, UK legislation updates will have resounding financial effects across the workforce. The extension of IR35 in April 2020 could reduce individual net income by up to 25%, costing some tradesmen thousands of pounds in additional income tax and National Insurance every year. IR35 will also increase responsibilities of employers, who may make changes to their workforce planning and the jobs that they offer to self-employed individuals.
To protect yourself against unexpected tax increases, the UK government recommends using the CEST tool on HMRC website to determine your own IR35 status and whether the new rules will apply to you. Tradespeople can also work with their current employer to identify the best ways of adapting to the updated legislation.
Myth: Working for Yourself Means Working Less
Fact: Setting your own hours is great for creating your own schedule – you can fit work around sleep, exercise, family, caring responsibilities, travel and hobbies. Creative freedom, flexibility to work remotely or from home, and work/life balance are all key factors in the decision to become your own boss. However, many self-employed people end up working longer hours: looking for the next job can often become a job in itself, and business admin such as tax and insurance can add considerable amounts of work every month.
Juggling a number of clients and projects at the same time ensures every day presents a different challenge and can provide a varied and exciting career in the long-term. However, sole tradesmen need impeccable organisational skills to manage all aspects of their company and work whilst keeping clients happy.
Myth: It’s a Risky and Unstable Career Choice
Fact: There are currently 4.8million self-employed citizens working in the UK. Despite the increasing popularity of self-employment in the past ten years, most companies and most industries are struggling to grow their workforces fast enough – a trend that will worsen rapidly in the coming years. Aviation businesses will need to recruit over 750,000 new engineers and technicians in the next 20 years, and the UK Automotive sector will need 1.8 million more technical workers by 2025. The continual demand for skills across industries means that tradespeople can enjoy a wealth of job opportunities and continually upskill to fit employer needs.
Most medium and large companies across industries use a recruitment agency to find new manual workers. Partnering with a recruitment company that specialises in your sector will give you an advantage over other people when jobseeking, regardless of employment status. Specialist recruiters spend every day talking to workers in your industry – they know what’s going on in your field, what employers are looking for and most importantly, they know what will separate you from other jobseekers. Registering with a recruitment agency ensures that you can be contacted as soon as relevant new jobs become available, and stay in touch with you to plan new interviews before the end of your next contract.