Self employed and PAYE, equivalent rates...

Russe11

Say the NMW, what would be the rate required working selfemployed to realise this?

or

If charging rate £x selfemployed what would the PAYE hourly rate?

I know you have to factor in lots of varibles, but is there any set calculation?

heretolearn_2

Not possible to apply any formula as it works so differently.

When self employed, you take your income, deduct expenses, and what is left is your profit - that's what you can take out and then pay tax on, so the equivalent of your gross pay when salaried. What you need to set as your charge rate to end up with enough money at the end of it all depends on what your expenses would be.

Why would you want all the effort of self-employment just to end up with NMW anyway, better off working at McDonalds or Asda.

Hammyman

Russe11 wrote: »

Say the NMW, what would be the rate required working selfemployed to realise this?

or

If charging rate £x selfemployed what would the PAYE hourly rate?

I know you have to factor in lots of varibles, but is there any set calculation?

No, there is no such thing as a set calculation.

Last year I worked 16hrs a week on average. Sometimes more.
My turnover was 27k. On paper I made a loss of £88 so I was actually paying to work on paper.

If you're wanting to know what to charge for doing a job as s/e, such as driving someones lorry for them where you only provide your time, at LEAST the PAYE hourly rate plus 28% which will compensate you for the holiday pay component plus I'd add the 13.5% what the employer would be paying in employers NI as well. I'd not be charging any less than 140% of the PAYE rate.

Russe11

Hammyman wrote: »

No, there is no such thing as a set calculation.

Last year I worked 16hrs a week on average. Sometimes more.
My turnover was 27k. On paper I made a loss of £88 so I was actually paying to work on paper.

If you're wanting to know what to charge for doing a job as s/e, such as driving someones lorry for them where you only provide your time, at LEAST the PAYE hourly rate plus 28% which will compensate you for the holiday pay component plus I'd add the 13.5% what the employer would be paying in employers NI as well. I'd not be charging any less than 140% of the PAYE rate.

Yeah thats the idea, just looking at the time element, can factor in the varible overheads on top(which will differ for every business).

I thought the holiday componet was the equivelent of 12.08% if you are counting the statoury minimum.

Russe11

heretolearn wrote: »

Not possible to apply any formula as it works so differently.

When self employed, you take your income, deduct expenses, and what is left is your profit - that's what you can take out and then pay tax on, so the equivalent of your gross pay when salaried. What you need to set as your charge rate to end up with enough money at the end of it all depends on what your expenses would be.

Why would you want all the effort of self-employment just to end up with NMW anyway, better off working at McDonalds or Asda.

Maybe better off working a min wage job, but what if I can't get a minimum wage job?

soupdragon10

Also depends it you are keen to be your own boss and have a trade/skill that people will pay for.

Russe11

soupdragon10 wrote: »

Also depends it you are keen to be your own boss and have a trade/skill that people will pay for.

Sure, thats if you are your own boss, then you source your own work, charge what you can, liable when things go wrong etc etc

Really i'm talking about the grey area where strictly speaking HMRC would class you as an employee, but the "employer" wants you to be self employed fiddle.

no-oneknowsme

Hammyman wrote: »

Last year I worked 16hrs a week on average. Sometimes more.
My turnover was 27k. On paper I made a loss of £88 so I was actually paying to work on paper.

.

Hammyman , I have noticed others on the boards say things such as this ^^ before and never fully understood what it means .

Do you mean that your turnover was £27k but that you had allowable expenses of around this figure too so your reportable income to HMRC on your tax return was minus £88?

So not tax to pay at all?

Just curious

Hammyman

Yes, thats correct. Mileage is a good example where it costs you around 12p-14p per mile incl wear and tear but you can claim 45p per mile

no-oneknowsme

Dont HMRC ever query someone who is self employed yet paying no tax?

Although to be honest , after reading your post Hammy I feel a little better.

My Hubby is a self employed taxi driver and so all his earnings are cash earning every penny of which is accounted for and yet when I was doing his end of year sums the other day it transpired that although he has a decent enough turnover , by the time his allowable expenses are deducted his profit was just level with his personal allowance which means he only has to pay a tiny amount of tax and class 4.....

Even though its all above board I was worried incase HMRC frowned upon the fact that he is working 30 hours per week yet has such a low profit.

Suppose with the price of diesel and allowing for depot rent/radio hire fee's of £90 per week , a lot of drivers are going to be in the same situation.

Russe11

Hammyman wrote: »

Yes, thats correct. Mileage is a good example where it costs you around 12p-14p per mile incl wear and tear but you can claim 45p per mile

Pay a couple of family members part time/minimum wage can also release a few hundred tax free a month etc etc

However when being self employed is not really self employed, then all these expenses don't exsist.

We all know its not right and HMRC says so, however its very common.

So if its the only way I can earn money then its what i'll have to do.

So there will be limited expenses, the only things I might have are mobiles, banking sevices and the odd bit of equipment.

I won't be using a vehicle, though I do know I could claim 20p a mile for using my bike, not sure I could accumulate all that many miles to make it worth while though.