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Self-Employed Pension Advice

Getting to grips with your pension scheme is one of the things self-employed people put on their to-do list, but never seem to get around to the 'do' bit.

Case in point, a freelancer—6 years into their freelance career—asked FreelanceUK what they should be doing about saving for retirement.

Given that they've done nothing about their pension since going it alone, but has legacy pensions from their time as a permie, it's a tricky question, and one many of us face.

The rest of the premise is in the Facebook embed below. But, here's the shortcut if you want to go straight to FreelanceUK for the answer.

When you get to the bottom of that post, why not click through to the authors, Freelancer Financials, and take them up on their offer of a free pension review? Have a good one!

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Accord re-introduce 10% deposit mortgages for FTBs only!

MORTGAGE UPDATE:@AccordMortgages—a proven #contractor-friendly #mortgage lender—has reintroduced 90% LTV (10% deposit) for #FirstTimeBuyers only! As other lenders had to withdraw their #10%deposit deals quickly, this offer likewise may be short lived! https://t.co/BSFu8mfZhK

— FreelancerFinancials (@contractorIFA) June 24, 2020

Accord Mortgages (intermediary-only) has had an up and down month with 10% deposit mortgages:

5th June:

Increases rates on 10% deposit mortgages;

8th June:

Withdraws from 90% LTV market;

9th June:

Announces delays after busiest days for 17 years!

16th June:

Reintroduces 90% lending, but for FTBs only.

Accord are one of the proven contractor-friendly mortgage lenders, but only deal through mortgage brokers and intermediaries.

Since lockdown, several lenders have tried to reintroduce low deposit mortgages. But they've had to withdraw them almost as quickly, for several reasons:

sheer demand from applicants and brokers, who'd been building up enquiries, waiting for 90% LTV to return;

applications in the pipeline since early spring, which had backed up during lockdown;

lenders' own staffing problems, as they themselves have had adjust to new ways of working.

If you've managed to save 10% deposit and are a first-time buyer, please, don't wait. These low deposit mortgage deals may not be around for long, given that few other lenders are yet to bring back 10% deposit mortgages.

At least get your interest registered with Freelancer Financials (publisher of above tweet), the mortgage partner of ContractorUK. They offer a free, no obligation appraisal of your situation, and have even helped 650 contractors switch mortgages during lockdown without charge.

You really have nothing to lose by giving them a call on: 0208-421-7999. You'll be so glad you did!

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Succinct article on InTouch Accounting above, looking at the core components of being a successful contractor:

self-discipline

proactivity

financially ready

flexibility

adaptability

What's in it for me?

The first thing to understand about contracting is that being your own boss doesn't mean you can do what you want.

Sure, you can bring a piece of you to the role. Just don't get offended when the client tells you to reel it in and focus on the role they hired you for.

Also, don't jump into contracting 'because you're skint' and you think that a higher wage for doing essentially the same role will cure your situation.

In the long run, yes, it will. Probably. But remember, you're self-employed. No sick pay (without insurance), holiday pay nor guarantee of a contract renewal or extension at the end of your current contract.

Contracting is not for the faint-hearted (IMHO).

Sarah's article covers the basics of those points, then adds a dollop of additional good advice at the end. Go, Get 'Em, Tiger! 

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From a respondent (and seemingly despondent) pool of 1,400 freelancers surveyed:

¾ have lost income during lockdown,

and of those, the drop has been substantial, on average 76%;

69% of freelance businesses now have serious cashflow problems;

only 9% (1 in 11) have been able to access support from the 'all encompassing' SEISS,

and of the 91% that haven't, 73% confirmed that their limited company trading structure was the barrier;

stress levels have risen 80% across the pool since COVID-19 reached Blighty.

With stress levels going through the roof and one in five freelance businesses set to close, I'm sure this wasn't the 80/20 business model Pareto had in mind.

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Becoming increasingly agile will be a requirement of the future contingent workforce

.@SJDAccountancy have just finished delivering a fantastic session on The Good Work Plan and the evolving world of work. This was among many predictions they have made on the future of work. #NFD pic.twitter.com/EjUFZ2bPJ9

— IPSE (@teamIPSE) June 18, 2020

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In the above article, Patrick Gribben of Intouch Accounting looks at the key dates for CJRS as outlined by The Chancellor on May 29th, 2020, and what they may mean to contractors.

Your next step will depend upon how you've approached furloughing to date.

Yet more will rely on your client or agency's ability to meet flexible furlough requirements over the summer.

The only thing that is certain right now is that little is certain!

Take nothing for granted. Fully research any 'next step' you might be thinking of making.

And do speak to your accountant. They are probably in the best position to advise you of any liabilities you may incur, depending upon which way you're comfortable proceeding.

Alternatively, you can go directly to the horse's mouth and read the UK Govt.'s CJRS Guidance. Good luck with that!

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Blinkered is the word I'd use, in relation to both the reality of contracting and what the economy needs (or will do very shortly).

Flippant, in regards to law and case history is another. 

Downright unforgivable yet another…

…maths was never my strong point. Listening, it seems, isn't HMRC's forté, despite a considerable volume of history upon which to cast its ear.

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You might fancy kicking off your slippers and binging on box-sets while your client's furloughed you. But you can bet your contractor competition isn't just sittin' there chillin'. Well, not all the time.

Contractors: get savvy, not sloppy during lockdown

Through the link above, you'll find Gorilla Accounting's list of boxes you can tick so that you come out of lockdown like the true pro you aspire to be; here's the condensed version: 

Update your CV to include your current contract (and any expired ones since you last dusted it off);

Refresh your industry knowledge; all manner of online training is available, so no excuses;

Brush up your skills (or learn new ones) - as above;

Think about casting your net wider (especially if you're just 'settling' in your current contract);

Don’t forget previous clients, even if it's just to keep the dialogue flowing;

Boost your social media presence - are you really 'marketing' on all the platforms where potential clients are hanging out, or are you just:

watching cat videos, 

creating memes, and 

looking at photos of your ex?

Maintain equipment, update software and look for SMART(er) ways to work in the future;

Actually finish those tasks you've been putting off for a rainy day; if you hadn't noticed, it's pouring!

Get your sales pitch down, and work in your new skills;

Organise your documents and folders and clean your home office - be brutal!

Wind down - when all the above is done, take a break, even if it's just getting your partner to hide your laptop for a week;

Line up an accountant (mayhap, like Gorilla!) and make sure that whatever financial help is on offer to you, you're getting!

This includes mortgages; think lender switch and interest-only for the time being!

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It's time to stop Loan Charge before anyone else decides that the only way to escape its punitive, unfair and immoral tax is to take their own life. 

Many hold this "sneeringly, arrogantly dismissive " man responsible. Helen's article, through the link above, makes it tough to disagree.

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The missing millions, REPORT: gaps in SEISS payments for four key sectors of the self-employed workforce:

self-employed above trading profits threshold

limited company directors

freelancers on short-term contracts

newly self-employed

Through the link above, you'll find commentary from industry thoughtleaders.

Alternatively, read the House of Commons' Treasury Committee report in full: Economic impact of coronavirus: Gaps in support [PDF] 

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…the scheme does not cover vital groups like freelancers who work through limited companies and the newly self-employed. There are also those whose incomes were over the threshold before the crisis, but who now find themselves with no income at all. We urge the government to do more for these groups, many of whom still have no sign of work coming in.” ~ Andy Chamberlain, IPSE’s director of policy.

Hear, hear!

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The delay in implementing IR35 has come too late for many contractors and businesses. 

Speaking to thoughtleaders last week, it seems many contractors were already in the process of converting to PAYE when the announcement came in March. 

The thought of going through all the hassle for the sake of a few months more going through their limited company payment structure? It just didn't seem worth it, so they've accepted PAYE for what it is and are running with it.

But there will still be a few contractors whose contracts are up for renewal over summer. To underline, you don't need to foresake your limited company yet…

…that is, unless your employer has carte blanche refused to renew any new contracts in the current climate. But we've got a feeling that might come back to bite them on their behinds on the other side of lockdown. #WatchThisSpace

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Tax income for the Govt. nose-dived by over 40% in April. In the same month, the economy's output registered the biggest slump on record, >20%.

In order to continue to support the flagging economy, HMRC will leave no stone unturned in its attempts to recoup its dues. 

Don't give the taxman an excuse to start considering you as inside IR35. You think it's bad now…?

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When asked to define "self-employment", the government is often slow to proffer a definitive answer.

On this occasion, though, they've been explicitly clear in stating what being self-employed doesn't cover.

Hundreds of thousands of UK contractors and freelancers who use a Limited Company payment structure have once again been left in the cold by Rishi Sunak's ignorance, spite or combination of both.

All I'm gonna say, Chancellor, is this:

When redundancies come because businesses can't afford to contribute to furloughing, as businesses are due to begin next month, who's going to fill the gaps created by those redundancies when we get out of this crisis? Those employees aren't going to hang about to see if their jobs will become available again. No! And it's not going to be contractors, either, because the way this government's going, only those on top dollar are going to survive this crisis. And, once those contractors realise how in demand they are, they're going to charge the Earth for their services (and who can blame them given the lack of support given to them), hitting companies who are trying to recover even harder. When it comes to contracting, the government and HMRC have a real, dangerous blind spot. Ignorance is no excuse.

Rishi, you will reap what you have sown; more in depth coverage in the article above by Qdos Contractor.

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Reopening the housing market is a must if the government wants to kickstart a recovery.  But when a handful of lenders tried to reintroduce the most popular mortgage, 90% LTV, they soon shut up shop to escape the deluge of applications that flooded underwriters' offices.

This makes getting a mortgage as a contractor or freelancer more difficult.  Even moreso now that lenders have upped the criteria against which independent professionals can borrow.

When will we see low deposit mortgages re-enter the fray?  To be honest, no one really knows.  See what the contractor-industry thought leaders and lenders themselves have to say in this horse-pun filled article.

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