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Wednesday, 3 October 2023

Becoming self-employed if you are over 50

The decision to become self-employed is a big step, especially if you're close to retirement. But it's not one that you need to take without advice. You can get help with planning, training courses and funding.

What are the options?

There are different ways of being self-employed:

  • as a sole trader, working alone: the simplest option
  • in a partnership: with two or more people
  • as a limited company: the business has a separate identity (you will need help to set this up)
  • a franchise: an agreement that allows the franchise buyer the right to run a branch of a business that someone else has set up

The challenges

If you run your own business, there is no holiday or sick pay, no pension and no regular income. There is every chance that you will have to work longer, irregular hours and sometimes weekends. You will also have to submit your own tax accounts.

The benefits

Benefits include not having to work for somebody else, self-fulfilment, making full use of your experience, talents and abilities, financial independence and flexible working hours.

First steps to self-employment

Before you become self-employed, you will have to research and develop your business idea. Then prepare a business plan that reflects what you need to do to set up and run a business.

The Citizens Advice Bureau has a self-employment checklist.

The national business advice service Business Link offers a business start-up organiser.

Funding and grant schemes available for over 50s

You may be able to get money from grants from charities or trusts or loans from banks and building societies.

The Grants and Support Directory (GSD) is a potential source of help with start-up or business development.

Helpline for the newly self-employed

HM Revenue & Customs (HMRC) has a helpline for the newly self-employed people. You can call 08459 15 45 15 and request the guide 'Starting Up in Business'.

New Enterprise Allowance

New Enterprise Allowance is aimed at helping eligible customers start their own business or become self-employed.

To be eligible you must be 18 or over and been claiming Jobseekers Allowance continually for six months or more.

Training courses

Business Link offers advice on training for those considering starting up in business.

Advice and support

The Prince's Initiative for Mature Enterprise (PRIME) is a not-for-profit national organisation dedicated to helping people over 50 set up in business. You can call the free helpline on 0800 783 1904 for information.

Business Link is a good source of information and advice. You can call the Business Link helpline on 0845 600 9006, (minicom on 0845 606 2666).

The Citizens Advice Bureau has an advice section for the self-employed.

What are financial and tax implications of the decision?

You will need enough money to live on while you start up the business, plus funding for start-up costs.

You will also be responsible for paying your own tax and National Insurance. You may choose to have an accountant or alternatively you can submit a self-assessment tax return online.

If you are starting up a new business through New Deal, you get the same benefits as you got before. You might also be eligible for a top up. If you find work through New Deal, there are different benefits on offer. These include tax credits, to make sure you're better off in a job than on benefits.

Working after State Pension age

You will have to pay tax on your State Pension if you are still in paid work when you receive it. See 'Working past State Pension age - your options' for more information.

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