Starting work - not payrolled

tranmererovers

I have been on maternity leave for the past year and this week have been approached by an ex employer to do some work for them.

This is on a temporary basis 2 - 3 months initially, part time hours.

I am starting on Wednesday :eek: (bit scary after having over a year off) and they want me to submit invoices rather than go on the payroll.

Now I have always been on a payroll and have no experience of what this might entail and what I need to do (if anything)

I wonder if any of you kind knowlegeable people can give me some advice or pointers on what to do or where to look

Thanks in anticipation

CrustyMcMuffin

Well if you don't have a ltd company and don't want to set one up you could always contact a company who can act as an umbrella company for you(I think that's the terminology). When I was contracting I used a company called Brookson, you basically submit a timesheet to them and they invoice the company on your behalf. They also sort out all the tax, NI contributions for you. They also have the added benefit of paying you in such a way that you pay less tax by making you a share holder and paying your wages as a share dividend rather than wages.

Savvy_Sue

I'm not saying Crusty's wrong, but presumably you are currently on unpaid maternity leave. And you're only planning to work part-time for this ex employer, and it's only going to be part-time.

I wouldn't think you'd be earning enough to make it worth paying an umbrella company! They don't do it out of the goodness of their heart, and although in some circumstances it can save you money to do this, I don't think you're in those circumstances!

So, phone your local tax office and tell them you are planning to do some work on a self-employed basis. You need to register with them, and there's a fine if you don't do so within 6 (?) months. But they'll advise on what you need to do about tax - fill in a self-assessment form is probably the answer! You probably also need to ask about exemption from paying NI.

Submitting an invoice doesn't have to be difficult. You can choose a simple name, like 'my surname secretarial' and add a note on the bottom saying 'please make cheques payable to a surname'. You put your name and address, their name and address, what the invoice is for, eg

INVOICE
6 hours secretarial support at £50 per hour £300
3 hours switchboard support at £25 per hour £ 75
Total £375

And away you go!

If your total earnings between now and 5 April next year are more than about £5000 then yes, you will have to pay some tax, so put it aside as you go along. But if you're only doing this work, and NOT going back to your 'proper' job then you probably won't have to pay any tax. Unless this other job pays mega bucks!

The other thing is that actually it's HMRC who says whether you're self-employed or not. They may feel that this company should be employing you, and by asking you to submit invoices the company is trying to avoid paying NI etc. I believe it's harder to argue that you're S/E if you only work for one company.

The other reason for asking you to submit invoices is that if you're not employed, you're not entitled to sick pay, holiday pay, or joining their pension scheme. Over a short period, these things aren't that much of an issue, but if the work you're doing carried on for a longer period, obviously such benefits would be worth having!

tranmererovers

Thanks Savvy_Sue - a really useful post but a few more questions on some of your comments if you don't mind...

Savvy_Sue wrote:

I'm not saying Crusty's wrong, but presumably you are currently on unpaid maternity leave. And you're only planning to work part-time for this ex employer, and it's only going to be part-time.

That's correct - 18 - 24 hours a week

So, phone your local tax office and tell them you are planning to do some work on a self-employed basis. You need to register with them, and there's a fine if you don't do so within 6 (?) months. But they'll advise on what you need to do about tax - fill in a self-assessment form is probably the answer! You probably also need to ask about exemption from paying NI.

OK but can you just clarify why I would want to do this?

If your total earnings between now and 5 April next year are more than about £5000 then yes, you will have to pay some tax, so put it aside as you go along. But if you're only doing this work, and NOT going back to your 'proper' job then you probably won't have to pay any tax. Unless this other job pays mega bucks!

I estimate that my earnings will take me above the tax threshold before the end of the financial year.

The other reason for asking you to submit invoices is that if you're not employed, you're not entitled to sick pay, holiday pay, or joining their pension scheme. Over a short period, these things aren't that much of an issue, but if the work you're doing carried on for a longer period, obviously such benefits would be worth having!

Would I be advised to use an accountant to track things or is it fairly self explanatory for a relatively simple situation like mine?

Kilty_2

Deadline for registration is 3 months

(I'm sending my forms off on Monday so that I'm within the deadline )

Kilty_2

As for National Insurance, when you are self employed it's charged at £2.10 a week.

If you are going to earn less than £4345 a year you can apply for a Small Earnings Exemption Certificate so you don't need to pay NI but if your earnings are gonna be above than then you will definately need to pay it, either by direct debit or quarterly bills.

tranmererovers

Kilty wrote:

As for National Insurance, when you are self employed it's charged at £2.10 a week.

If you are going to earn less than £4345 a year you can apply for a Small Earnings Exemption Certificate so you don't need to pay NI but if your earnings are gonna be above than then you will definately need to pay it, either by direct debit or quarterly bills.

Don't think I will be able to do this as my earnings are likely to exceed that for the year...

Savvy_Sue

tranmererovers wrote:

Thanks Savvy_Sue - a really useful post but a few more questions on some of your comments if you don't mind...

The other people answering these questions are likely to be more up-to-date than me, but to cover the questions which don't seem to have been covered yet:

tranmererovers wrote:

OK but can you just clarify why I would want to do this?

Because self-employed NI contributions aren't as useful as employed NI contributions - they don't count towards being able to claim JSA, for example - and - making a wild guess here - you're in receipt of Child Benefit, which gives you what's called Home Responsibilities Protection, for which the main benefit is that you get credit towards your pension, which is about all S/E NI conts are useful for, AFIAK.

tranmererovers wrote:

I estimate that my earnings will take me above the tax threshold before the end of the financial year.

So you'll need to do a Self Assessment form. Not too hard, even if you have two sources of income. When you register with HMRC as SE, they'll put you on the list to get one! With all the right pages. And they'll carry on sending one every year - if you ask them nicely once you haven't got any SE income, eventually they'll stop!

tranmererovers wrote:

Would I be advised to use an accountant to track things or is it fairly self explanatory for a relatively simple situation like mine?

Personally, I'd think for the amount involved you could do it yourself. If you're working from home, there are a few things you can claim against your income, but there's advice on the HMRC website to help you work out what's reasonable. And if you're not working from home, there's very little you can claim, unless it's truly 'required' spending in order to do the job.

It is several years since I did this, but I just kept my invoices in a file, along with the counterfoil that came with the cheques I was sent. Then added them up at the end of the year when I did my self assessment form.

tranmererovers wrote:

Don't think I will be able to do this as my earnings are likely to exceed that for the year...

But I think - please check! - that it's your earnings from self-employment exceeding that figure, not your total earnings. Unclear from what you said whether you are going back to the job you're on M/L from AS WELL AS this little bit of S/E, and whether the S/E earnings alone will take you over that.

Hope that helps ...