To discourage self employment for adult daughter

Which twin are you?

She sounds low in confidence maybe would help if she makes her own decisions Being self employed can be good for some people what does she want to do

Why will she not be making weekly contributions to a pension if she goes self-employed? I assume it is the state pension you are speaking of.

If she is self employed she will be expected to pay towards her state pension. I suggest you look at this link www.gov.uk/government/publications/your-new-state-pension-explained/your-state-pension-explained Within this document several sections refer directly to self-employed people.

She can also make contributions to a personal pension as well, although contributions to the state pension scheme should take priority.

If she has rheumatoid arthritis, and is finding work the struggle you describe and she thinks she can make an adequate income going self-employed then I think that is a very sensible idea.

Bear in mind that if her income as a self employed person is below £12,750 a year. She will automatically be credited with state pension contributions. I quote from the above document
If you’re self-employed, your Class 2 National Insurance contributions are treated as paid if you have profits from £6845 to £12570 in the 2025 to 2026 tax year. You pay Class 4 National Insurance contributions when your profits are above £12,570 in the 2025 to 2026 tax year.

In your case I would be giving my daughter every encouragemnet to go self employed, but help her to set up all the paperwork she needs to satisfy the Inland Revenue.

As it is clear that you can afford it, why not pay a tax accountant to help her set up her accounting ssystem and explain to her what she needs to do and when to keep her tax situation in order?

She has money and no worries that way let her take a chance.

I'm interested what makes you say she is low in confidence, is it because she isn't married and at home ? We live in a highly expensive area where only very high earners can afford to move out.

I didn't actually know all of that Monica. For some reason I thought NI contributions were voluntary if you were self employed. I thought it was fairly standard if you were a sole trader which she is and so I don't think she will need an accountant. Or is it tricky to do? Generally I feel being employed by someone is better but she says she can't cope and also that the work just isnt coming through anymore hence wanting to concentrate more on self employment.

I've been self-employed for 37 years (UK).

When I was about 30 I saw a financial advisor and he set up a private pension plan for me.
I contributed an amount I felt comfortable with each month to start with, the advisor sensibly set the policy up so my contributions would rise by 5% each year.
As the years went by I voluntarily increased my monthly contributions above this amount and have ended up with a respectable lump sum 🙂

In addition as a self-employed person I paid National Insurance through my tax return which contributed to my state pension, so I now get the full (new) pension.

So don't despair on your daughter's behalf.
It would be useful for her to talk to a professional financial advisor and discuss her options.

For some reason I thought NI contributions were voluntary if you were self employed.

No!! 🤣

You do have to tell your local tax office that you want to register as self-employed, it's quite straightforward.
Depending on what line of work your daughter is doing there will be recognised business expenses she can offset against her earnings in order to calculate her accounts and net (taxable) profit.

I don't think she will need an accountant.

I've never used an accountant.

I read up carefully as to what expenses I can legitimately claim on the Inland Revenue website eg use of car, purchases made necessary to the business, professional insurances and memberships.

My husband helped me set up my initial spreadsheets to record my income and expenditure and I've developed these as I've gone along.

She has all the invoices stored on her phone.
People say it's easy to set up but we will see.
I still think she is better off being employed by someone else but she says she can't manage what she is doing at present and wants to do this instead.
Working has always been important to her but obviously tricky with the condition she has.

TopsyAndTim

I'm interested what makes you say she is low in confidence, is it because she isn't married and at home ? We live in a highly expensive area where only very high earners can afford to move out.

I didn't actually know all of that Monica. For some reason I thought NI contributions were voluntary if you were self employed. I thought it was fairly standard if you were a sole trader which she is and so I don't think she will need an accountant. Or is it tricky to do? Generally I feel being employed by someone is better but she says she can't cope and also that the work just isnt coming through anymore hence wanting to concentrate more on self employment.

If you stopped undermining her ability to make her own decisions I'm sure she would be fine.

IMO what your D needs is support and encouragement.

TopsyandTim I cannot emphasise too strongly how important it is for someone becoming a sole trader to make sure they are set up properly with proper accounting for every penny she earns, making sure she pays her NI and sets aside money for income tax.

The fact that you did not realise that she would have to make contributions to NI, shows how unfamiliar you are with the complexities of being a self employed and it is so easy, with the best of intentions to find yourself with a burgeoning debt to the HMRC.

If you ever have had a cursory read of why someone, anyone, has gone bankrupt, or a small firm, and some bigger ones, has gone into liquidation 9 times in 10, their main creditor is HMRC.

I can see no reason, given your daughter's health problems and your support, why life will not be much easier for your daughter self employed - and without the stress, her health will probably improve as well,

There are sites online that can help her like this one www.money.co.uk/business/how-to-register-as-self-employed . Most self employed people I know have usually consulted an accountant or someone similar when they set up as self-employed and thereafter, pay an accountant once a year to deal with their tax return. There are expenses you can claim to set against tax and an accountant will know all about this

MOnica explain it very well…….the only thing I would add is to suggest your daughter takes a short course at a local college on small business set-up if there’s something available. The more knowledge she has, the better she will be prepared …….. HMRC aren’t there to catch anyone out after all but correct background knowledge of business regulations is a bonus surely.

You stress you are very wealthy ( your words) and she has ‘lots of money’ so why shouldn’t she try to branch out on her own are you sure you are not being over cautious, she can set up a private pension for herself and pay an accountant once a year onto make sure everything is in order My young grandson has done just that and the accountant takes all the money worries off his shoulders

I still think she is better off being employed by someone else.

Not if it making her unhappy and sick. At 40 your daughter has nearly 30 years of employment ahead of her - if she can find a way of enjoying work for that time then I really don't think you should stand in her way.

After decades of employment I started my own business and was extremely happy, contributed to a pension scheme and financially stable until and after I retired.

All I needed to know to set myself up I learned from a book I took out of the local library that was called something like, "How to start your own gardening business."

This might be the making of your daughter. If she tries and succeeds it will be wonderful. If she doesn't enjoy it then there will always be another job she can take. I bet she thrives and loves it.

Your limited knowledge about working for oneself makes me think you are not well placed to advise her.

You should be more concerned about your daughter’s current health and awful work situation than about any future pension. You say that you are wealthy and seem to imply you will be leaving her well provided for after your death. How about spending some of your wealth now to support her while she makes her own way out of what has become an intolerable situation?

I think you need to back her up and support her in her plans. The sort of work she is doing is unsuitable for someone with RA. It is good that she is looking at other possibilities.

If you are wealthy and concern about your daughter’s pension, what you can do is gift your daughter up to £3k each year. She can then use the gift to top up her private pension and pay her national insurance for her state pension whilst she sorts herself out career wise.

With RA, self employment may be the better option for your daughter. She could choose her hours and managed her illness at the same time.

My daughter is a high earner and she has just quit her job with nothing line up. She has quite a bit of savings behind her but like most people working for the private sector, her pension is very small. She is thinking of starting her own business.

I told her that is the best decision since her health is more important than money. If the business does not work, well, she can always go back to the corporate world.

I wouldn't discourage her if she is miserable as she is.

Maybe if money is very tight she could top up with a straightforward part time job till her business takes off.

SporeRB one of my daughters has recently done the same.
She's not earning the same money but is in control.

At her age I would think she can make her own decisions. She has managed to save and you are wealthy, I do not see a problem.

This. Use your money now, to help her.

SporeRB

If you are wealthy and concern about your daughter’s pension, what you can do is gift your daughter up to £3k each year. She can then use the gift to top up her private pension and pay her national insurance for her state pension whilst she sorts herself out career wise.

With RA, self employment may be the better option for your daughter. She could choose her hours and managed her illness at the same time.

My daughter is a high earner and she has just quit her job with nothing line up. She has quite a bit of savings behind her but like most people working for the private sector, her pension is very small. She is thinking of starting her own business.

I told her that is the best decision since her health is more important than money. If the business does not work, well, she can always go back to the corporate world.

I was attempting to quote.

This is what I believe, help her now.