Self Employed Status

MoneyMan

Hi Guys,

I have recently been offered several new jobs and one of these is on a self-employed basis, I would take a set wage from the company however need to self assess myself for tax purposes.

Can you tell me the pros' and cons for this? The other jobs I’m considering are standard and they will be sorting out the tax & n.i. plus provide with a pension and car allowance.

The self-employed role has no pension, however the company have advised me they will pay for all my expenses.

Thanks..

BFG_2

Pros and cons...Depends on what they offer you vs what you get as employee.Basically Self-employedlower Nat Insurnace (approx 7%) (but less benefits availablemore things can be offset against your income - eg car (partly), PC's, etcLower tax bills (generally speaking)Possiblility of 'employing OH' - saves £1800/yr in tax (assumes they don't work already or receive means tested benefits)Greater job security - you wouldn't sack yourself would you?EmployeeMore benefits if sackedLess paperwork/hassleLess freedomLess job securityHTHBFGps - I'm self-employed (in case you didn't guess)pps - I'm not an accountant, but you should consider seeing one (many offer a free half hour initial appt)

BFG_2

What the hell has gone wrong with my postings - they all loose their formatting when I post (see above posting)- anyone got any ideas???

Debt_Free_Chick

MoneyMan wrote:

Hi Guys,

I have recently been offered several new jobs and one of these is on a self-employed basis, I would take a set wage from the company however need to self assess myself for tax purposes.

hhhmmmmmm....... would this be your only job?

If so, then the taxman may not accept that you are self-employed. No-one can choose whether to be self-employed or employed - the taxman decides, depending on the circumstances.

If you are truly self-employed so that this "job" is one of a number you carry out, then you may be OK. If this is your only job and the company dictates the terms of the work, then you will be classed as employed.

None of this really affects you, though - if the taxman decides that you are employed, then the company concerned will have no option but to operate PAYE and deduct income tax and national insurance contributions.

How does the taxman decide? Well, it's not cast in tablets of stone, but this article provides some useful pointers.

Regards

MoneyMan

Debt_Free_Chick wrote:

hhhmmmmmm....... would this be your only job?

If so, then the taxman may not accept that you are self-employed. No-one can choose whether to be self-employed or employed - the taxman decides, depending on the circumstances.

If you are truly self-employed so that this "job" is one of a number you carry out, then you may be OK. If this is your only job and the company dictates the terms of the work, then you will be classed as employed.

None of this really affects you, though - if the taxman decides that you are employed, then the company concerned will have no option but to operate PAYE and deduct income tax and national insurance contributions.

How does the taxman decide? Well, it's not cast in tablets of stone, but this article provides some useful pointers.

Regards

Yes, this would be my only job, however I've been advised they would pay me gross on my wages.

What is the benefit for the company to class me as self employed? Is it a tax benefit for them and me?

Does this mean they can terminate my contract without any notice, or does this depend on the contract between me and the business.

BFG_2

MoneyMan wrote:

What is the benefit for the company to class me as self employed? Is it a tax benefit for them and me?

Does this mean they can terminate my contract without any notice, or does this depend on the contract between me and the business.

Answer: They save 13.8% NIC'sDepends totally on your contract, but typically subcontractor (ie you if self-employed) has less 'rights' than an employee.

missk_ensington

I'll tell you how it works; You get all the sh1tty bits of being Self Employed but none of the perks, you get all the sh1tty bits of being employed but none of the perks!

Debt_Free_Chick

MoneyMan wrote:

Yes, this would be my only job, however I've been advised they would pay me gross on my wages.

What is the benefit for the company to class me as self employed? Is it a tax benefit for them and me?

Does this mean they can terminate my contract without any notice, or does this depend on the contract between me and the business.

They also get to avoid all the employment law that protects employees e.g. redundancy!

You might want to check what they pay you if you are (a) on holiday or (b) ill or (c) not working for any other reason.

You'll have no right to paid time off for stuff like paternity leave. If they run a pension scheme you'll have no right to join it - no right to any other benefits, if they offer them to employees.

You'll have to register as self employed with HMRC, pay your own NI (and you don't earn the Additional State Pension when you're self employed!), keep records, prepare accounts and submit your own tax return. And you'll need to save somewhere between 25%-30% of what you recieve in order to pay your tax as it's not due until you've submitted your tax return.

What's difference in pay offered by the two different options?

BFG_2

missk_ensington wrote:

I'll tell you how it works; You get all the sh1tty bits of being Self Employed but none of the perks, you get all the sh1tty bits of being employed but none of the perks!

That's a bit unfair.It depends upon what the two pay rates being offered are.EgsSick pay - most small employers don't pay any sick pay for 1st 3 days then only SSP (£45/week) - not all that great a 'perk'Holiday pay - agreed, it needs to be factored into s/emp rate being paidPensions - many employees don't subscribe even when there is a scheme (many small emp's only offer the Stakeholder Pension) and as s/emp you can contribute more effectively at whatever level you want (tax free)Tax - usually lower for s/emp Deductibility of expenses - much greater for a s/emp than emp (lower burden of eligibility) eg many s/emp's save £1800 tax by emp their OH as a secretary/admin)You really should check things out a bit before giving such a slanted comment, howver if you're speaking from personal bitter experience I can fully understand your position.BFG