PAYE or self employed

Phil_rich

Good afternoon,

I would like some advuce please. Currently I am working full time earning £35k per year and then in the evenings and weekend I work self-employed and generate about £10k per year.

Now I am getting too much work for self employed just part time but want to keep my main job. Therefore I am thinking of suggesting to my employers that I switch from being an employee to being self employed with them also. This will give me the chance to work from home more often, therefore doing work for more then one client.

My question is, will I be better off if I switch to self employed for both? I think I will as I can claim travelling to work back as an expense, also I will be working from home more so can start claiming some of my house expenses.

Am i correct?

One further question, how much in direct costs is it costing my employer to employ me? 40 hour week and paid £35k with 3% pension.

Thanks for any advice or views.

Phil

Phil_rich

Anyone got any info or advice?

PlutoinCapricorn

This sounds like what is known as "false self employment" to me, and HMRC do not like it. It is the terms and conditions of your work that determine whether or not self employment is applicable.

You can't switch just like that to self employment, carrying on working for the same 'employer' even if both you and they are happy. You might be able to convince them that it would cost them less if you became self employed, but they should be aware that if HMRC investigated them and found regular payments to you over the long term, they might be liable for all the back tax and NI. No employer that complies with HMRC's regulations would accept such an arrangement.

It also seems to me that you might be cheating your employer if you work at home: in your position I might ask to go from 5 to 4 days a week.

This has been discussed many, many times on MSE as it seems like a good idea, but HMRC is the final authority.

chrismac1

"HMRC is the final authority."

Not true. The Tribunals and Courts are the final authority - just last week HMRC lost yet another IR35 case. What no-one knows, though, is how many folk they've pressurised into paying up on the basis of false self-employment. Three key questions I ask clients who are potential IR35 "victims":

1. If you were offered a week's work at double the rate, would you be free to say "I'll be having next week off, see you in 2 weeks time"?
2. Are you in complete control over how your work is done - or closely supervised, appraised by your contractor, tied to fixed hours and so on?
3. If you get ill, how does your work get done? Are you responsible for finding and producing a substitute, or is it your "employer"'s task to sort this out?

Note that it's not enough just to have the words in the contract. It must be how things will operate in practice. Cases have been lost because the right words were in the contract but, for example, when the guy was sick the employer simply got one of his other staff members to sort out the task.

Phil_rich

Hi, thanks for the replies.

To the points above;
1 Yes thats the idea if i get offered work at a better rate then I will 're-schedule' my current employers work to suit me working the better paid infrequent work.
2. I am not really controlled, I get given a job or 3 and its down to me which i progress first and how i manage my time on each and the hours i work are flexible and if i need to go to a meeting for 1 or 3 of my jobs then i sort out when and when and i just go.
3. At the moment if i am ill my work will be sorted by my employer (by sub-letting to a contractor) but the new agreement would see me sorting any jobs i have already started by either doing from home ill or employing a further subby.

Hope this makes sense.

Also can anyone tell me how much £££ its costing them to employ me now?

Thanks
Phil

DCodd

Employment status is where it gets tricky.

You do not have to provide a substitute if you can not do the work but you must have a provision to be able to do so. At the end of the day, the contractor can refuse your substitute and engage another subbbie (depending on the wording of the contract) but if the contractor uses his employed staff to cover your work, then you will more than likely be deemed an employee.

There also should be a level of financial risk for you and a certain amount of control over how and when you do the work, but this can be less important in certain circumstances.

The thing is that you can be an employee even if you only woprk for the Employer for 1 day.

I would seek out an accountant with good experience of dealing with employemnt status issues and get some advice on your circumstances because no two situations are the same.

chrismac1

To answer the question, direct costs are £319.38 per month in employer's NI. Plus 875 a month pension. The true costs of your contract are much higher though - does it include holiday pay, training days, paid sickness and so on? Because this lot adds up to between 25% and 40% of the cost of employing most UK permanents.