Rambling about employee/self-employed issues

The law recognises that some people are self-employed and some people are employed. This is a matter of fact (based on opinion) not choice.

"why can't I decide how to conduct my own business life?" You can. You decided to be employed. If you want to be self-employed then conduct your business life in a self-employed way.

"As far as I understand, the strict requirements to be a self-employed were created to "protect" certain categories of workers that were de-facto employees but were instead treated by the companies as self-employed, so that the companies could deduct them as expenses, avoid paying pension, bonuses and health insurance and pretty much lay them with very short notice."

Who is legally entitled to pensions, bonuses or health insurance? I don't think that's the reason. I think employment status is a matter of reality.

"What's the difference with my situation as a PAYE now? I don't get bonuses. I don't get pension. I do get health insurance payed by the company. I have a fixed term contract. (originally 8 months, now extended to 10, but nothing like a family friendly long term/unending contract). And the company can lay me off with a two weeks notice."

If you don't like the contract refuse it. It isn't compulsory.

I'm not sure whether you are wanting your employer to pay for certain payments, you are wanting someone else to pay for them or you are wanting to deduct the expenses against tax.

If you are wanting your employer to pay for these expenses then ask them to. If they won't they don't see it as necessary to do your job and obviously they must want you to do your job without these abilities. That is their choice. If you are not happy with that I would suggest you leave and find an employer who satisfies your wishes.

If you are wanting someone else to pay for you obtaining these skills I would suggest that would be great. I wish you luck in your quest. Who do you want to ask and what response will you get?

If you want to have these expenses deducted against tax you could do this by being self employed. All you would have to do is to satisfy the criteria for being self-employed. If you don't wish to satisfy that criteria I would think it is unreasonable to still expect these expenses to be deducted against tax.

"One idea I had is to open a company and finance it with my employee salary and cover equipment and business expenses with it. But as the company wouldn't normally have an income, I suppose I couldn't do any deduction either, isn't it?"

You call that an idea?

That would mean to change not only the way I conduct my business life, but also the size and the type of projects I can work on, when I'm perfectly happy with them. Indeed sounds like a non-choice.

I don't quite understand this statement. What does "matter or reality" means in this context? Regarding your question, sorry, my mistake. Where I come from employers match at least part of the pension and health insurances payments of the employee. I understand this is not the case in the UK, where pension plans are not compulsory on the company side. I'm not saying this is good or bad, I just didn't know about it. Bonuses though, should go to anybody who contributed to the company's success. Sure, I see your point, it's not a legal right.

(I just realized that the NIC actually goes out of my salary, the company doesn't put anything into it).

If all the contracts in the industry are like that you are left again with a non-choice. This is due to the small size, young age and fierce competition of the industry and the current supply/demand dynamics in it. A radical business change is something I am considering, sure, but I'm trying to find out if there are other options.

I'd happy deducting professional expenses that the company doesn't cover, I don't think the company should pay anything more than what they do.

This is oversimplified. All employers in the industry I work in offer pretty much the same treatment, with no substantial changes unless you become one of a few permanent employees. As the industry massively shrinks and grows (I've been in companies that have doubled and tripled in size in a matter of months, after a relatively long period of dead calm, likely to shrink back anytime in the future) there is a large crowd of good professionals which I'm part of that have to flow with the tide, changing employer two-three times a year and holding tight when the work is scarce. I do not contend that it's the company's choice to decide what to pay and what not to pay. But I do contend the underlying assumption that what the company cover is all that is needed for the individual professional to mantain his position in the market. And those additional expenses is what I think should be deductible.

Ok, I guess I haven't been clear enough. Got the message. What I want is to be able to deduct expenses that are needed to remain competitive in the market but that are not covered by the companies I work for. Now, if I was permanently employed by a company that wouldn't really be a problem. The company would be more likely to see the return of any investiment in a permanent worker and "normally" a diligent worker is not risking to loose his job. But my point is that there's a bunch of people who are not permanently employed, who need to sustain professional expenses during and outside their contracted period and yet I understand you are saying they can't deduct those expenses.

I make you an example. Suppose I have three months off work because the market is low and instead of taking the first job I find I decide to wait for a good opportunity and do something on my own in the meantime. With something on my own, I do not mean something to be sold. My job is exceedingly specialized and my output alone is not a final product. I mean practicising the skills I already have creating something that might give me better chances as soon as the market pick up again. Suppose I need specific equipment for that, and I'm willing to buy it. Doesn't that sounds like something that should be classified as a professional expenditure? Yet, as my only income comes from the periods I'm employed, I can't deduct it, correct? Does that sounds right?

Can you please tell me how does this fit in the case I'm describing above?

Until you describe why I shouldn't do so, absolutely. =) Please keep in mind that I'm new in the UK and there are many things I do not understand.

Thanks for your opinion.

Manu

The point is, the problem that you seem to have is that you work in an industry where the employer has the upper-hand and takes advantage of that fact.

But you are complaining here that the problem is really that the tax system won't let you 'pretend' to be self employed to compensate for being taken advantage of by the employer.

Sorry, it doesn't work like that. Many people work (or have worked) in an industry where the employer takes advantage of the situation.

You have two choices:

1) restructure you business into one which is truly Self Employed. If what you do is really as specialised as you say, this *will* be possible (though not necessarily financially painless) 2) find a more enlightened employer (in the same or a different industry)

Tim

Time to come back in Italy? :-p Apart from the joke, if you are the same Emanuele D'Arrigo who was posting in VFX and graphic ngs, I guess the company mentioned in the url could be interested to read your cv (maybe not for that junior position, but only God knows the future ;-)).

I couldn't have said it more clearly. It's not a bad industry or bad people. But they do know they have the upper hand indeed.

I see your point. Yep, my position doesn't make too much sense.

Uhm... financial pain should never be an issue if it's the right step in a career or if it simply make somebody happier... Right now though, I can't clearly see a way to make it possible without a radical change in role and type of tasks I'd handle. I guess there can be a satisfactory way to do it. I just haven't found it yet.

That is something that I'm working on. There are at least two employers in the US that would definitely fit the bill. I think I need an additional two or three projects here in the UK to be good enough for them, but I'll eventually get there. It's just a matter of time and patience.

So, sounds like I have no way out really. Oh well. I'll survive. =)

Thanks Tim for your help. The situation is much clearer now.

Emanuele D'Arrigo

US employers may be enlightened in some ways but they're not in others, you work long[ish] hours there and you don't get much annual holiday.

Alessandro, thanks for your suggestion. =)

No, I don't think it's time to come back to Italy, especially not to work. Doesn't look like much has changed since I left in 98.

If I really had to go back somewhere I'd go back in Germany. So far, between the three countries I've been living in, they have the best quality of life. But the UK are an almost necessary step if you want to work on seriously big projects, as you might already know.

So, I guess I'll hold tight for now. It should get better in a few years, when my CV has more high caliber productions.

Thank you again.

Emanuele D'Arrigo

The payed holiday I get here is currently the same as they do, 4 weeks. Altough, appearently you start with 1 week a year incrementing by one week for the next three years before you get the full amount. That luckilly doesn't happen here.

About the longish hours it would normally be true, my collegues there work 10 hrs/day by contract. Here the amount of hours I'm supposed to work is very dodgy because my contract says that I "might" have to work more than 48 hrs a week, but doesn't really say anything about the lower limit nor the upper one. And then of course there's the tiny issue that overtime is not payed while is often required.

At least the two companies there I have in mind do pay overtime and try not to abuse of it. But they are not exactly the norm indeed, they are two very well sailing companies and they can afford it (which in turn, in my opinion, also raise the quality of their output).

Thanks for your reply.

Emanuele D'Arrigo