How does financial planning help if you are self-employed?

Being your own boss has never been so popular. The number of self-employed people has been on the up in the UK since 2001. They now account for around 15% of the entire working population.

Thanks to new technology making new ways of working possible, and just possibly a lack of traditional  jobs, there are now 4.6 million self-employed workers, according to the Office for National Statistics, ranging from Uber drivers to software consultants.

There are plenty of advantages. It can mean working where and when it suits you, and the flexibility to take on as much or as little work as you want or need. In some sectors, it can also mean a higher income with some experts in obscure aspects of technology, such as communications security being paid as much as £5,000 for a weeks’ work.

But there are some serious drawbacks too.  As a contractor, you can forget about company health insurance, paid holidays, pension plans, or other benefits.  Taking a day off sick means lost pay, it can also be more difficult to get a mortgage, and income can be worryingly variable if you are not in constant demand and your workflow is not steady.

Fortunately, there are ways to replace some of the security and benefits taken for granted by traditional employees – but you may need financial planning from the Continuum team to deliver it.

Protecting your Income

One of the biggest worries about being your own boss is protecting your income.  With no employer to pay sick pay or you need to arrange your own financial safety net, to replace your income if you become ill or had an accident that made you unable to work. At Continuum, we can help tailor a package of protection that will provide a replacement income whether you had a serious illness that meant you could never work again or were incapacitated for a short term. There are various types of insurance cover available, and getting expert advice is even more essential when you are your own boss. 

Protecting your dependants

Employers often have some kind of life cover, or death in service benefits for staff.  Having your own plan in place is even more important when it is the only financial lifeline your family will have.

At Continuum we can arrange the cover you need. There can be substantial savings on your premiums through tax relief if you operate a limited company.

Arranging a mortgage

If you have already arranged a mortgage, you can simply carry on making your monthly repayments. However, if you want to move, or are ready to buy your first home, things can be a little more difficult.

You may be better off self-employed, but high street mortgage lenders may struggle to deal with any circumstances outside their standard criteria, and this can make arranging a mortgage more challenging. But you can rely on a Continuum mortgage adviser who can look at specialised mortgage products from many lenders to find the mortgage that’s right for you.

Thinking about the future

As an employee, you would be enrolled into a company pension scheme. With no employer, your pension and your future are entirely your responsibility.

Getting help from Continuum can help you arrange some particularly cost-effective solutions – pension contributions paid by your own limited company can qualify for corporation tax relief whilst contributions paid by you as an individual qualify for income tax relief.

This allows you to build up your pension pot in a very tax efficient way, but getting expert advice is essential on the best way to manage your pension plans.

Of course, there is no need to stop with a pension. Once you have started working with a Continuum advisor, he or she will be able to help you with wealth creation, planning the savings and investment strategies required to make the most of your money.

After all, however much you enjoy being self-employed, you probably intend to stop working one day. With help from a Continuum adviser, it could be sooner rather than later.

If you are self-employed, or are thinking about becoming your own boss, call us now on 0345 643 0770, or email us at [email protected]

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.

Your home may be repossessed if you do not keep up repayments on your mortgage.

The value of investments can fall as well as rise and you may get back less than you invested.

Levels and basis of reliefs from taxation are subject to change and depend upon your personal circumstances.


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