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  • Ian M

Self Employment – pros and cons

There are many positive aspects of turning to self employment and much has been written encouraging people to take the step. We would agree with many of these positive statements and have seen hundreds of users of our virtual receptionist and virtual office services flourish over the years.

However there are always a number of people who become disillusioned with being self employed and there are some common factors amongst those who are closing down their self employed status and looking to return to a permanent job.

It felt a good idea to share some of these reasons to help people know some of the downsides of being self employed so they can be better prepared.

Obtaining a mortgage

If you are hoping to buy or re-mortgage a property in the near future then finding a mortgage will be harder, and you will not be able to pick the best interest rates. Lenders are nervous when your income may be uncertain and if you only have a limited history of self employment earnings. Expect the lender to ask for your last three years accounts or tax returns as evidence of your earnings.

If you charge for your time there is great pressure when you get paid to view the full amounts as yours, but the chances are you will have to pay some tax at the end of the year. When you were permanently employed your payslip shows the tax that had been deducted each month and that money was never in your bank account. Now you are self employed you have to get in the habit of putting 20% into a different account because, if you earn over the tax threshold, you are going to have to pay it to HMRC. This is one of the toughest things to have to do.

Holidays feel expensive

Many self employed people struggle to have a holiday in their first few years. Even if you are doing well there is always the knowledge that a holiday means loss of earnings, and that makes any holiday feel very expensive.

You have to be realistic that you can not work 52 weeks a year, even if you are lucky enough to have that much work on offer.

Sick Leave

Holidays can be planned, having to take time off because you are unwell can’t be planned. Again, try to put some money aside to build up a reserve in case you are unwell.


Any pension contributions are going to come from you, not some magical pot from your employer.


Sorry to sound pessimistic but if you think about these points and plan for them you are far more likely to be successful.

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