Self Employed... what do i need to know?

aallank

My DH is currently looking for part time work and has come across a delivery job which is on a self employed basis... they will pay his wages (a set amount each week) into his bank.

Now.. what do i need to do?

He will be using his own car to do the job, so will he get the fuel costs back at the end of the year or are you just not charged tax for the fuel you use?

Any advice/information would be much appreciated,

TIA

InsideInsurance

If he is self employed he does not receive wages from the client!

Firstly you would need to check what options are open to him. Self employed really means being a Sole Trader but many industries do not want to deal with sole traders because of potential consequences to them and instead ask that you either register with an umbrella company (where you become an employee of the umbrella) or form a Ltd (and you become an employee of the Ltd). This is a fairly complex area and there are several factors that determin which is the better for you but an accountant would be best to explain (most give a 30 free initial meeting).

If it is ok as a sole trader then you just have to contact HMRC and inform them you are now self employed and so register to both do annual tax returns as well as pay your NI contributions. He has no obligation to keep personal and business seperate as legally there is no separate business but will have to have evidence of all incomings and business related outgoings to complete the tax return. It is sensible however to ring fence the anticipated money you will have to pay each month rather than doing the tax return at year end and suddenly having to find £20,000 (or whatever his annual tax bill is).

For using a personal car for business use he would claim back a per mile figure which goes on the tax return and is offset from his tax liabilities. Ensure that the insurance you have on the vehicle covers the correct class of business!

The employee -v- self employed is a sensitive issue and HMRC are keen to crack down on people who are really employees being masked as self employed as they typically pay significantly less tax. As such you need to learn to play the game a little, they will not pay his wages, they will pay his invoices.

aallank

so is it a problem that they are advertising it as a self employed job? could it cause problems?

They have then said that the pay will be a set amount a week paid in cash into my bank.

so just to confirm, at the end of the tax year, he would not get fuel costs back? he would just not pay tax on the fuel costs?

saintjammyswine

Sounds to me like he is employed, providing services in return for regular payment! Have they asked him to submit invoices for work done?

InsideInsurance

aallank wrote: »

so just to confirm, at the end of the tax year, he would not get fuel costs back? he would just not pay tax on the fuel costs?

If it is his personal vehicle he is using then he can claim back mileage at the annually set rate - currently 45p for the first 10,000 and something less for anything above that (cannot remember as dont drive much at the moment - was about 20p)

aallank

saintjammyswine wrote: »

Sounds to me like he is employed, providing services in return for regular payment! Have they asked him to submit invoices for work done?

He hasn't started yet, so not sure, but it definitly states self employed: taken from the advert
' we are currently have 50 self employed contractors'

and on the phone he stated he would be self employed (its only delivering newspapers) and that it would be cash into the bank every week. there was a mention of invoices.... what does this mean?

Many thanks for taking the time to reply..

Lovelyjoolz

I suspect it means that they don't want to employ him, so will fiddle the HMRC by labelling him as self-employed.

Your husband will have to raise an invoice to them each week for the amount that they say they will be paying.

Your husband will then have to keep books (accounts) of all his outgoings relating to the work (fuel, insurance, mot's, tyres etc etc) and submitt a tax return to the HMRC at the end of the year, paying over any tax he owes.

He will still have to pay tax on the fuel at point of purchase, just like normal, but he will be able to offset this against his tax liabilities at the end of the year.

Have a chat with an accountant (take advantage of their 30mins free sessions and take extensive notes!) and buy a book on bookkeeping. It's not difficult, but you need to know what you're doing. HMRC's website is very informative too - have a good look around it, it tells you what you must do.

InsideInsurance

Because you are not an employee you do not automatically receive a payslip and pay.

You will create an invoice on a weekly basis advising your billing the company for X. Exactly what X is will depend on the contract, my current contract is for each professional day so my invoices say my company is billing for 5 professional days of my consultancy.

If it is job rated (eg delivering 500 papers) then it would say that it would say it is invoicing for delivering 5,000 papers etc

aallank

Can anyone tell me, when i ring HMRC (tax credits) and let them know our change in situation.. i know as my DH is going to be self employed, they will ask what we're expecting the total amount for the year to be (profit) so what do i deduct from the total yearly earnings, fuel? what about car insurance (do they pay the full amount as i'm using my personal car for 3 hours a day every day)? (part time work) what about MOT and servicing? do they pay for this too?
Any more advice would be much appreciated..
TIA..

InsideInsurance

If you are using a personal car you get the allowance (45p per mile etc as previously posted) rather than fuel, MOT etc. If you have a company car then you claim fuel but have to pay tax as it is a Benefit In Kind by having a company car.

HMRC's website has some info but it isnt the lightest of reading http://www.hmrc.gov.uk/incometax/tax-allow-ees.htm

aallank

He will be using his own personal car. They pay £7.28 per day fuel costs, he will be doing 7 days, 30 miles a day. have i read it right, that if a company pays part of car costs, he will then get the rest back at the end of the year? so the company will pay 24p per mile, tax people pay 45p per mile, the difference being 21p, so at the end of the year he should get around £2200, have i worked this out right? and if so, how do we go about claiming this, will HMRC send us the form in April?
Thanks for your help and replying so quickly
TIA once again..