self employed driver

marksmachines

Hi there everyone i am a hgv driver and am thinking about going self employed as a driver (not owner driver) people are telling me you can claim tax alowance on a room in your house as it is uses as an office, on your mobile phone bills, etc, etc, is this true. I no there are pros and cons but can someone tell me is it worth doing. thanks mark

Gertie_Walker

As a self employed person, you decide what you need to spend in order to run the business. If you decide to keep an office at home, then you do so and you include all the costs in your accounts. The expenses incurred in your business reduce the tax you pay.
For the use of a room at home, the usual method is to charge the proportion of the running costs in relation to the number of rooms in the house. So if you have 5 rooms (excl kitchen and bathroom) and use one for business, then you charge one fifth of your household running costs (insurance, rent, mortgage, utilities) to your business. The same with phone and mobile - you make a reasonable estimate of the business costs of these items.

marksmachines

is it worth me doing

Gertie_Walker

Is it worth you doing what? Only you can know whether you would make enough money to make it worthwhile surely?

paulwf

marksmachines wrote: »

is it worth me doing

Are you asking if it is worth switching from an employed to a self employed position?

If so then unless the pay is significantly better it isn't. The main difference is that when you are self employed you won't get holiday pay (a minimum of 5.6 weeks if you were employed) and sick pay. Sick pay is a very important "safety net" e.g. if you are self employed and break your leg you might not get paid for several months.

Self employed also doesn't guarantee minimum wage and there is more hassle having to fill in tax returns and you may have to raise invoices. Keeping money aside for the tax for sometimes over a year can also be a pain unless you have good self control.

You can't claim back expenses incurred as such, you can only offset them against tax. So for example if you run up a £10 phone bill you don't get £10 back, you just don't pay tax on that amount so you in effect save £2 if you pay tax at basic rate. Home office use is also only for the proportion of time that room is used for business, as you will mainly be out on the road you might claim 1 room for 10% of the time. I think you can claim £3 a week for home office use before you need to provide a full breakdown and invoices, so offsetting £150ish a year will save you roughly £30...better than nothing but as you may have to buy a printer and a PC it's small change.

I would want 25% extra at least to go self employed, preferably 50% unless you can offset a change in lifestyle e.g. being able to pick and choose the jobs you take and your hours.

WHA

paulwf wrote: »

I would want 25% extra at least to go self employed, preferably 50% unless you can offset a change in lifestyle e.g. being able to pick and choose the jobs you take and your hours.

25% - 50% is spot on for the premium you need to be paid to make it worthwhile going self employed (labour only) as opposed to being an employee.

The employer is saving 12.8% employers NIC, holiday pay, sick pay, pension, costs of training, etc etc., so anything less than 25% and they're making money out of you!!

Tax advantages should be the icing on the cake - if you're relying on tax breaks to make it worthwhile, then you really shouldn't be going self employed - tax breaks come and go and shouldn't form part of the decision making process.

martindow

Self employment is determined by the nature of the work you are doing and you can't necessarily choose. You need to be certain before you change or these could be a big tax bill.

This page of HMRC's site shows the criteria.
As a general guide as to whether a worker is an employee or self-employed; if the answer is 'Yes' to all of the following questions, then the worker is probably an employee:

• Do they have to do the work themselves?
• Can someone tell them at any time what to do, where to carry out the work or when and how to do it?
• Can they work a set amount of hours?
• Can someone move them from task to task?
• Are they paid by the hour, week, or month?
• Can they get overtime pay or bonus payment?

If the answer is 'Yes' to all of the following questions, it will usually mean that the worker is self-employed:

• Can they hire someone to do the work or engage helpers at their own expense?
• Do they risk their own money?
• Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?
• Do they agree to do a job for a fixed price regardless of how long the job may take?
• Can they decide what work to do, how and when to do the work and where to provide the services?
• Do they regularly work for a number of different people?
• Do they have to correct unsatisfactory work in their own time and at their own expense?

http://www.hmrc.gov.uk/employment-status/index.htm

Annisele

To add to what martindow said: if you're going to be working as an HGV driver and driving somebody else's vehicle under that person's instructions, I'm struggling to see how you could be said to be self-employed at all.

Are you able to elaborate on exactly what you'd be doing in this driving position?

WHA

Annisele wrote: »

To add to what martindow said: if you're going to be working as an HGV driver and driving somebody else's vehicle under that person's instructions, I'm struggling to see how you could be said to be self-employed at all.

Are you able to elaborate on exactly what you'd be doing in this driving position?

The bigger hauliers have their own "self employment" contracts as drafted/reviewed by the top tax barristers so that they comply with the law as regards self employment. Don't forget that the HMRC website contains "their opinion" as to what they think (hope) the law says - which is actually different in some finer technical points from what the courts have decided. If the OP is thinking of working for a large/established haulier, they have no worries about the employment/self employment status. Any anyhow, it's the employer who takes the risk of wrong classification - if the employer is happy to offer self employed work and is happy to pay a premium, then the worker should take the offer and not worry too much.

schneckster

The way HMRC have viewed it in the past is that if a driver works for only one company and uses their vehicles, then they should be employed and not self employed. You may supply invoices but if it is to only one company, then the reasonable question is, why no employment contract?

We all know why, of course. It's easier to get rid of drivers, no holiday, sick or other statutory pay to worry about, and cheaper on tax.

But to say the employer cops the grief and not the self employed is not true. If HMRC decide you should be an employee and not self employed they will recalculate your taxes as though you were an employee from the time you became self employed (up to 6 years before, I think) and give you a bill for the difference plus interest... and as self employed usually pay less tax than employees, that could be a large amount.

The company gets it worse... back dated unpaid employer's NI plus interest and usually a fine. A courier company down south suffered this a few years back... the back dated taxes plus interest and a £15k fine closed it's doors. The drivers all got hit for unpaid income tax and NI plus interest, but didn't get fined. They did all have to find new jobs, though.

If you want to go self employed as a non-owner driver, then go through an agency... the HMRC have no problem, then.

Best of luck,

Schneckster