Advice/info from freelancers please - do you make it work??

[jennyh]

HI

I have been freelancing since April after I was made redundant earlier in the year, it has been quite straight-forward but was always supposed to be a short term thing whilst I looked at what work was flexible enough for childcare etc. I didn't get into the issue of accountants/tax rebate as I am yet to earn enough to require it.

I got very excited about a potential permanent role that seemed a bit too good to be true...it turns out that they want me on a freelance contract rather than permanent and I don't know enough about long-term freelancing to make an informed decision.

I would benefit from a contract that would give me a minimum term (to be decided but no less than 6 months) and a notice period of 1 month but would have no benefits of sick pay, holiday entitlement etc. It would be working with an old colleague of mine in a very well established company and I trust her, she says that there is room for the job to grow and that the hours are likely to increase and it could potentially become a permanent role if they feel it is working/needed. But no guarantee and i've recently learnt that when it comes to work, no-one takes as much notice of you needs/interests as you do!

We really need to move house and wanted to think about it next year but my boyfriend may also be freelancing - anyone have any advice re likelihood of getting a mortgage in these circumstances?

Also we wanted to think about another baby but obviously I wouldn't get any mat pay whatsoever which is such a kick in the stomach as we just couldn't afford it without.

I wouldn't benefit from an increased freelance day rate from what I can tell, would be fairly competitive with permanent roles.

My heart is really into this job as it would be perfect for me but just not sure I have the confidence to carry on risking my income and our future.

Ahy tips from anyone in the same situation??

[oimissus]

the only help I can give (I freelance but it sounds very different) is that as long as you pay your National Insurance contributions at (I think) level 2, then you will get Maternity Allowance paid to you (same as statutary maternity pay but for the self-employed). We remortgaged last year and we didn't count my salary as I had to have 3 years behind me (but I kept my name on the mortgage, just with a salary of ?0.00) so that could be a problem.

[Convex]

As someone who used to book freelancers, you should negotiate a higher daily rate to compensate for the no sick pay, no other benefits, etc. Surely they will understand the need for this. It's taking the mickey otherwise.

The alternative is that they put you on a fixed term contract which could then be extended if the hours continue. Generally these are minimum 3 or 6 months.

Presumably you haven't talked money yet (from where it say 'from what I can tell' sorry if I've read too much into that) so its not a done deal yet.

D you know what other freelancers doing your job are paid? It's helpful to go in with some knowledge of rates. I'm not saying you have to hold out for the full rate and its an estalished relationship etc etc but you need more pay than a permanent employee otherwise you are in effect being paid less then them once benefits are considered.

[lucyA1308]

I'm freelance. You do get Mat pay, but currently at about ?430 ish per month.

You have to have a very strong sense of self preservation. Yes, charge a bit extra (but don't be greedy, or else they will go else where), because of the uncertainty / unpredictability.

[mima08]

My experience with mortgages is 3years ago, but it was not good. At that point, banks did not want to consider a lending multiple based on the combined income from my husband (self-employed) and mine (salaried at that time) - even though he was low risk, had 25years experience in his industry etc. We ended up using my salary only. If both of you are freelancing, you might be struggling. There might be specialist lenders out there, but I am not aware of any and guess the rates would not be great from them.

On the other hand - what do you have to lose if you take this contract? You could always terminate it if something better came along (i.e. sense of self-preservation...)

[Scruffy Mummy]

Definately agree that you need to re-negoitate your pay. As a broad rule of thumb, I would suggest you ask for 25% more to cover your tax, then holidays which I would guess would be 10% and then 5 - 10% contingency (i.e. child sick, your sickness, etc). I always remember the advice someone once gave me that if you start high when you set your fee, you can always go down! But if you start too low, you can never go up! (No one will ever go 'Hey, you are charging too low a rate - let's pay you more!')

But if you put in a fee which is too high for them, they will let you know and you can negiotate. If you go in with a figure too low and then find that effectively you earning way less than employees, then you are stuck. If you are freelance, you should be able to leave without worry if you find another job.

The problem with getting a mortgage is that you need 3 years accounts before getting a mortgage as a self-employed person. I think they are pretty strict on this - once you have this, it should be fine.

[Mathilda]

I agree your rate definitely needs to be higher than a permanent rate so that you can cover your tax and benefits. There are different ways of setting up as a freelancer so you should take advice on this - I have set up my own company employing just me, that means I would be able to claim some statutory benefits, as I understand it that would include the ?500ish per month SMP.

Freelancing is working for me but there has been a lot to learn on the admin side!

[greenwater]

I freelance and am just coming to the end of my year with baby. You definitely need to earn more than a perm - that is the basic rule of freelancing - more risk, more reward. I am set up as a ltd company so am employed by myself (not self-employed) - strange but true. You do get SMP with a ltd company but mine will be in the form of a tax rebate so will come later so this needs factoring into your finances. Re mortgage, it is harder. As others have said, most high street banks wont even consider you without 2 or 3 years accounts. This said, I went to a small building society who were more flexible as there was a human at the end of the phone. They lent to me after 1.75 years, but we had a decent LTV and my hub is PAYE. I would encourage anyone to freelance; there are many advantages but you need a bit of time to get established financially.

[The Nappy Lady]

Re maternity pay as others said you need to pay national insurance and then, when pregnant you submit as I recall 3 months earnings (any 3 months from the previous 12 months) and they work out your maternity based on your earnings - though there is a maximum amount you can get. They actually tell you to make sure you pick your 3 highest earning months, the people were so helpful on the phone and there is info on line too. I think you get 9 months pay, but it's all a bit hazy now as it was 4 years ago!!

I'd say go for it and as others said you can always keep an eye out for something better. But I do think getting a mortgage is going to be a problem I'm afraid.

[bluesuperted]

Molly, I think it's changed, as when I sorted my Maternity Allowance (MA) for self-employment 2.5yrs ago, I didn't need to declare earnings in the qualifying 'test period' - every week that you pay full NI stamp you qualify for the full MA of around ?130 per week and as long as you do this for 26 weeks of the year or so before baby is born you are sorted for full MA for 39 weeks.

The thing you really SHOULDN'T do as a woman considering more babies is apply for the small earnings exemption (where you don't need to pay NI) even of your earnings are low, as then they do look at your earnings in the event of maternity to work out what you're due based on average earnings. It's very good cover to pay a little over ?100 a year in NI to have the insurance of decent maternity pay!

I found some good information on direct gov which is fairly clear: http://www.direct.gov.uk/en/moneytaxandbenefits/benefitstaxcreditsandothersupport/expectingorbringingupchildren/dg_10018869