The Trouble With Self Employment

Self employment comes with many advantages. You are your own boss. You get to do things your own way. Your quality of life is better. You can work around others factors in your life such as childcare arrangements. It’s brilliant in that respect – liberating in fact.

But it also comes with a range of problems. One of them being when it comes to finances. Many self employed people still struggle with things that many of us take forgranted, despite the number of self employed people being at a high. Specificially, getting credit, a mortgage, or renting through a lettings agency can pose huge problems, especially if you are single. I have avoided trying to get any sort of credit, bar buying my car, since I started my business because as far as I’m concerned I will not be looked on favourably.

My concerns became reality earlier this month when I decided it was time to leave houseshare accommodation and get my own place. Agencies will ask for evidence of your income. For me, as it does for so many self employed people, this posed a number of problems. Firstly, they want to see your SA302 – that’s your submitted self assessment tax return. Now, bear in mind that it is now January and my last submitted SA302 was for the year ending April 2017. Credit checkers only want to see submitted tax returns, therefore my income report is already almost a year out of date and therefore irrelevant to what I am doing now. If I was employed they wouldn’t ask to see my PAYE slips from a year ago.

The self assessment system is flawed for a number of reasons which can affect how your income looks. Working Tax Credits for instance do not appear on your form since they are already factored in elsewhere, so already whatever that total is, will not be considered as part of your gross profit. Some expenses you can claim aren’t actually expenditure – car mileage for instance. Now I know that my car runs at 12ppm. But I claim 45ppm. So this has the potential to be an inaccurate expenditure.

Many self employed people have additional savings set aside designed to help in these situations. They are great on a personal level for peace of mind in an uncertain world, but income reports will not take into account additional income not declared on your SA302 even if you make this clear on your application. You could have £30,000 in savings in the bank and they would not consider this as a guarantee you can pay your rent on time every month because savings can be ‘spent at any time’.

This means that what you thought was a certain way to assist in your attempts to rent – offering additional rent payments or a larger deposit in advance are of no use to you here. Landlords are told not to accept them and to exercise caution with self employed tenants even if the option to put extra guarantees in place is there. In my case, where my ‘official’ income was lower, they wouldn’t consider a guarantor and it was never explained to me why that would be the case.

I’ve Googled this problem and I am far from alone and it’s a frustrating situation. With future agencies I am now asking them in advance if my circumstances are prohibitive and what they take into account. I am also looking at private rental but it now means the process has been slowed up considerably. In the meantime, my frustrating houseshare accommodation situation continues.

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