Self Employed Guys - Advice Please

UK PROFESSIONAL DRIVERS FORUMS THE UK PROFESSIONAL DRIVERS FORUM (INTERACTIVE)
41

Right Well im still as confused as ever from most of the replys, basically at the moment I am paying £17.50 a week to Umbrella company irrespective of how many hours I work through an agency.
I have been offered another job where the boss has told me I will get paid cash in my bank at the end of every week, lets say £500 for arguments sake - he basically told me its up to me to sort out my own tax & Ni etc - I WILL not have to go hunting for week they are a very busy firm allegedly so basically I can’t see a risk to myself.

£500 coming in , £300 a week going out - £70 a week put aside for tax/ni / accountant ? where can it go wrong ? If I don’t like the job & I decide to go back on agency as SE i’m still saving the £17.50 a week Umbrella money & probs paying an accountant £200 a year maximum ?

42

I enjoy these debates about PAYE v Self Employed / Ltd Co… especially reading Dieseldoforme’s claims to be an expert on a something that he has obviously never done or got the balls to do. PAYE obviously works for him, fine, but that doesn’t mean he should preach his opinion and force it upon everyone. He limits his teachings to s/e or Ltd Co getting no Holiday Pay, only £1 an hour more pay and posts loads of confusing figures.

It’s very simple, if you want to be PAYE, then fine, if you want to be Self Employed or Limited Co then fine as well, go and see an accountant, who will gladly discuss the pros & cons with you, for free initially and then make your mind up. Don’t listen to Dieseldoforme’s preachings, make your own mind up. Avoid Umbrella Companies, they will rip you off and line their own pockets.

I won’t quote you any figures about what I earn, that’s my business, but I am VAT (flat rate) registered as I have to be, I earn more over the VAT registration threshold… feel free to look that up. Plus some of my clients require VAT registered as it benefits them as well.

I’m Ltd Co, I employ myself. My company invoices my clients, plus VAT, and then pays me every month a set basic wage regardless of how much I work (So that’s kills off Dieseldoforme’s no holiday pay - I get as much holiday pay as I want). I can then offset against tax:

Running my car (tax, insurance, MOT, repairs, servicing, mileage / fuel)
Using my house as an office (part of my gas, electric, water, council tax, insurance)
Telephone & Broadband
Mobile Phone
Clothing / Uniform
Other driving related equipment
Overnight equipment
Daily Food / Overnight allowances etc
Accountant (which isn’t much)
Computer (and new / replacement accessories)
Office furniture
Entertainment
And various other things I slip in unquestioned that could be business related!!! (I have never had a receipt or claim questioned by the Accountant or HMRC)

So I earn a minimal wage (ie pay very little PAYE tax), offset a large amount of monthly expenses, pay a monthly dividend to myself (taxable, but at a lower rate).

Then at the end of the year, I pay Corporation Tax on my profits (Corp Tax is lower than PAYE, so I save even more money). Whats left over is then mine as another Dividend… happy days…!!

Then there’s Director’s Loans… I wont get into these, but it again works in your favour.

S/emp or Ltd Co isn’t for everyone, you are taking a risk, but the risk can pay off. PAYE isn’t a guaranteed job anymore, no job is for life for life these days. Therefore, if you’re prepared to step out and try it, read up, ask a professional accountant and think about it. Start just with Agencies first, then build up to getting your own direct clients.

I don’t regret it.

43

I’m not seeing a big disagreement as such between what the posters are saying , they’re all roughly right.
They just appear to take a few facts, and go off on a tangent.
Probably long term you are better off PAYE, it brings great holiday benefits,employment and training rights etc…
Limited Company/self employed can bring an instantaneous bigger pay packet per week, but this should be looked at in the longer term. Or may be not, if you’re happy with high earnings now per week and are happy to take a chance on what the future holds, then its a good option.
As has been said further up the thread, you need to decide what you want to do and get the appropriate advice. Even with approptiate advice no one is going to tell you how to get rich quick. You’ll have to have the nouse for that yourself.
Personally i suspect we have a whole generation who think being self employed just means you’re actually employed but get more money or don’t pay tax. I know this because in this very forum i see comments like…“the lads in our place are complaining about…and they’re all self employed”, “i’m self employed through agency, how come i’ve got to pay for my own DCPC, its a load of bollox and a tax on our jobs”. I feel people with those perspectives on their own or others self employment don’t really have a clue.
Still we have agencys pushing employees down that route, and the employees seem to be happy to become contractors based on a minimal hourly increase or some such. And to be honest if i was desperate for work and an agency told me its the self employed route or nothing, i’d probably do as they asked. After all you can always complain about what you agreed to later on ?

44

Could someone direct me to the relevant section on HMRC website (or elswhere) that outlines the £10 per day meal allowance please.

45

3ducks:
Could someone direct me to the relevant section on HMRC website (or elswhere) that outlines the £10 per day meal allowance please.

Oh yes, here it is to be very exact.
S.57A ITTOIA 2005

This is also worth a look at…
hmrc.gov.uk/manuals/bimmanual/BIM47705.htm

And also…
hmrc.gov.uk/manuals/eimanual/EIM66170.htm

The thing i can’t find, it may not exist, is some sort of agreed rate between HMRC and say FTA which i would imagine where some sort of ‘accepted’ figure comes from. I’m sure there is an agreed rate, i just can’t find it.

46

“Don’t listen to Dieseldoforme’s preachings - listen to my preachings instead.”

Herongate:
Don’t listen to Dieseldoforme’s preachings . . . .

I won’t quote you any figures about what I earn, that’s my business, but I am VAT (flat rate) registered as I have to be, I earn more over the VAT registration threshold… feel free to look that up. Plus some of my clients require VAT registered as it benefits them as well.

I’m Ltd Co, I employ myself. My company invoices my clients, plus VAT, and then pays me every month a set basic wage regardless of how much I work (So that’s kills off Dieseldoforme’s no holiday pay - I get as much holiday pay as I want). I can then offset against tax:

Running my car (tax, insurance, MOT, repairs, servicing, mileage / fuel)
Using my house as an office (part of my gas, electric, water, council tax, insurance)
Telephone & Broadband
Mobile Phone
Clothing / Uniform
Other driving related equipment
Overnight equipment
Daily Food / Overnight allowances etc
Accountant (which isn’t much)
Computer (and new / replacement accessories)
Office furniture
Entertainment
And various other things I slip in unquestioned that could be business related!!! (I have never had a receipt or claim questioned by the Accountant or HMRC)

So I earn a minimal wage (ie pay very little PAYE tax), offset a large amount of monthly expenses, pay a monthly dividend to myself (taxable, but at a lower rate).

Then at the end of the year, I pay Corporation Tax on my profits (Corp Tax is lower than PAYE, so I save even more money). Whats left over is then mine as another Dividend… happy days…!!

Then there’s Director’s Loans… I wont get into these, but it again works in your favour.

S/emp or Ltd Co isn’t for everyone, you are taking a risk, but the risk can pay off. PAYE isn’t a guaranteed job anymore, no job is for life for life these days. Therefore, if you’re prepared to step out and try it, read up, ask a professional accountant and think about it. Start just with Agencies first, then build up to getting your own direct clients.

I don’t regret it.

47

Dieseldoforme:
“Don’t listen to Dieseldoforme’s preachings - listen to my preachings instead.”

:unamused: zzzzzzz

48

.
Aaaaaaahhhhhhh . . . Tommy Cooper has just entered the room.

Just like that.
.

49

.
Agencies love SE

No more Holiday Pay (£2800)
No more Employers National Insurance (£2500)
No more employees liability insurance (£?)
No more redundancy pay (£?)
No more sick pay
Plenty of washing hands if anything goes wrong (well he doesn’t work for me)
.
Great Value for a quid an hour.
.
.

50

Mike-C:
The thing i can’t find, it may not exist, is some sort of agreed rate
between HMRC and say FTA which i would imagine where some sort
of ‘accepted’ figure comes from. I’m sure there is an agreed rate,
i just can’t find it.

.
FOOD [/b]
TRAVEL [/b]
MILEAGE RATES
EXPENSES FORM > > > hmrc.gov.uk/forms/p87.pdf
.

51

tobytyke:
I have been offered another job where the boss has told me I will
get paid cash in my bank at the end of every week, lets say £500
for arguments sake - he basically told me its up to me to sort out
my own Tax + NI.

£500 coming in = £70 a week put aside for Tax + NI ?

.
OK, let’s look at the Tax + NI bill for Self Employed WITHOUT all
the fancy bookeeping and expense claims etc.

I’m going to give you six weeks holiday so you will work 46 weeks pa.

Your income for the year is 46 X 500 = £ 23000

Your Tax Free Allowance is £9440

So you must pay TAX on 23000 minus 9440 X 20 percent = £ 2712

Self Employed pay two kinds of National Insurance - CLASS 2 and CLASS 4

Class 2 is a flat rate of only £2.70pw X 52 = £ 140

Class 4 is 9 percent of income/profit over £7755 = £ 1372

£ 2712 + £ 140 + £ 1372 = £ 4224

£ 4224 over your 46 weeks of work = £ 92 pw to put aside.

Over 52 weeks you are left with :

£ 23000 minus £ 4224 divided by 52 = £ 361pw in your pocket…
.

52

I am getting stuck here if newlad gets 45p per mile from tax man so if on £10 per hour for 8 hour day he earns £80 why not work 200 miles away so tax man give him £180 per day or £100 more than his work.

Then with Herongate he works for his own company so he earns his own money that he then pays to his company that then pays his self so how can his company pay him as much holiday pay as he wants surely he his paying himself if he is not at work 28 days per year he is not earning

Like I say im stuck but I have been PAYE though agency for 5 years but still claim tax back on most things and get holiday pay.

53

mac12:
Newlad gets 45p per mile from tax man

Herongate works for his own company

.
Jack Dee has signed them up as a double act to appear Live at the Apollo.
.

54

Please lets clear confusion! if someone earns £10 per hour works 60 hours on PAYE he will earn £600. He will then take off relief of £9440 / 52
£181.53 taxed 20% on rest = £83.69 then N.I. too.

S/E earns same £600 but travels 400 miles to do it and claims 5 x’s £10 meal allowance and has tickets to prove it. The 400 mile allowance ( X .45p) = £180. PLEASE LETS GET THIS CLEAR THE TAX MAN NOR THE CUSTOMER PAYS THIS £230 IT IS A CLAIMABLE EXPENSE! Therefore the allowance is 20% of £230 = £46 so S/E pays £83.69 - £46 = £37.49 tax plus N.I. ]So for the £230 outlay saving of £46 tax![ I know some will claim for clothing allowances, phones etc. but it is always 20% of the value of those items!

I have done both and my preference is definetly PAYE.

I play golf with a consultant who actively recruits Self Employed by hard sell as it frees him from a lot of current employers legislation and “passes the buck” and his recruitment pitch is to hard sell the S/E with the so called benifits whilst keeping the pit falls discretley hidden.

55

Dieseldoforme:

tobytyke:
I have been offered another job where the boss has told me I will
get paid cash in my bank at the end of every week, lets say £500
for arguments sake - he basically told me its up to me to sort out
my own Tax + NI.

£500 coming in = £70 a week put aside for Tax + NI ?

.
OK, let’s look at the Tax + NI bill for Self Employed WITHOUT all
the fancy bookeeping and expense claims etc.

I’m going to give you six weeks holiday so you will work 46 weeks pa.

Your income for the year is 46 X 500 = £ 23000

Your Tax Free Allowance is £9440

So you must pay TAX on 23000 minus 9440 X 20 percent = £ 2712

Self Employed pay two kinds of National Insurance - CLASS 2 and CLASS 4

Class 2 is a flat rate of only £2.70pw X 52 = £ 140

Class 4 is 9 percent of income/profit over £7755 = £ 1372

£ 2712 + £ 140 + £ 1372 = £ 4224

£ 4224 over your 46 weeks of work = £ 92 pw to put aside.

Over 52 weeks you are left with :

£ 23000 minus £ 4224 divided by 52 = £ 361pw in your pocket…
.

You must have some funny eyes, I showed you earlier that I invoiced for £577 and I took home £519

56

NewLad:
.
You must have some funny eyes,
I showed you earlier that I invoiced for £577 and I took home £519

.
But your figures are full of crap and everyone
with an ounce of intelligence can see that.

You say that you did this for just six weeks in this financial year.
Therefore you cannot possibly know what your tax bill will be and you
can’t possible know if your expense claim has been tax man approved.

Stop misleading people with figures of fantasy.

There is still time for the Tax Man to demand all your receipts and
check the mileage between your home and place of work.
The Tax Man has done this very thing to a lad that I work with.

.

57

the old timer:
If someone earns £10 per hour works 60 hours on PAYE he will earn £600.

S/E earns same £600 but travels 400 miles to do it and

claims 5 X £10 meal allowance and has tickets to prove it.

I have done both and my preference is definetly PAYE.

.
The main point that I would like to get across is that PAYE Agency
Workers can also claim the same meal + mileage tax relief, on the
grounds that they will not work at the same location for over 24 months.
.

58

Dieseldoforme:

the old timer:
If someone earns £10 per hour works 60 hours on PAYE he will earn £600.

S/E earns same £600 but travels 400 miles to do it and

claims 5 X £10 meal allowance and has tickets to prove it.

I have done both and my preference is definetly PAYE.

.
The main point that I would like to get across is that PAYE Agency
Workers can also claim the same meal + mileage tax relief, on the
grounds that they will not work at the same location for over 24 months.
.

Takes away another “falsely sold” perk of being S/E. I do think that a lot of guys are sold the S/E route as an easy get out for some employers. There will be the odd few who genuinley make good but overall i would say the headaches far outweigh the benefits. that would be my advice to anyone thinking of the S/E route.

59

.
They think it’s all over . . .

. . . then the tax demand drops on the door mat.

2800 quid up ya ■■■ Colin (Sorry - private joke)
.

60

i was told when i became a truck driver that i would never have to think or work again ■■? %$@@@@"$&^ i think they lied …