Organisation expects a record 300,000 will become their own boss.

With the UK facing high unemployment, the Federation of Small Businesses (FSB) has predicted a record boom of 300,000 people deciding to become self employed.

The organisation has reassured retailers that this figure alone is not a cause for concern, as increased levels of self employment could create more jobs as these small businesses flourish.


However, it does warn that those who are self employed could be penalised by the taxman if they go on to work for other companies.

If an individual is contracted to another company for a period of about three months, the FSB claims the taxman will want to add them to the ‘PAYE bucket’ and turn their legal status from self-employed to that of an employee.

The FSB is calling on Her Majesty’s Revenue & Customs (HMRC) to respect a declaration of self-employment and not to penalise people who are ‘going it alone.’

HMRC must check within a six-month timeframe whether the entrepreneur meets the criteria for self-employment and once their self-employed status has been accepted, the applicant must be considered as self-employed unless a material change has taken place.

FSB national chairman John Walker said: "Unemployment continues to be a worry for everyone, and this year we are expecting more people to become their own boss and go it and alone by setting up in business, which will both help the economy grow and tackle unemployment as these businesses flourish.

"However, those who do become self-employed need to beware of the tax man who is penalising these people when they work for other companies, putting them in the PAYE bucket and turning their legal status from self-employed to an employee. The FSB is calling on HMRC to respect peoples’ wishes to be self-employed and for the HMRC to cease their tactics in pushing people into the PAYE net."