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The self-employed have a 12pc advantage over PAYE workers

According to the latest research, permanent PAYE workers lose on average 12 per cent more in taxes than their freelance or contract worker counterparts.

By and large, one of the most advantageous things about working for yourself as a contractor or a freelancer – besides the flexibility that choosing your own hours grants you – is the fact that your tax liabilities are considerably lower. Unlike someone in a PAYE position, a self-employed individual can deduct their work related expenses from their income before having to pay their taxes – and this works out to a collective savings of £66.9 billion when you take things such as work-related equipment, clothing, and travel into account.

On average, this £66.9 billion once spread out across the permanent worker population works out to be 12 per cent of their disposable income. However this is just an average; permanent workers in certain regions pay considerably more, such as Londoners who spend approximately £3,561 on work-related incidental expenses every year, while those in Yorkshire and Humberside spend around £2,535 and those living in the East of England end up shelling out about £2.542 in work expenses that a contractor could instead claim on his or her taxes.

However, these figures do not reflect the fact that train fares are on the rise, which will affect the vast number of Britons that make use of public transport to get to and from work. On the bright side, this could lead to many more permanent workers transitioning to self-employment in order to save on their taxes.

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