PAYE for contractor/casual worker

Any

Hi guys,

I need an advice on an issue I have not met before..

A company has a casual contractor, who does jobs only as required for the company and invoices them. But now he wants the company to sort out his tax, as he cannot be bothered to work it out himself.

Will the company then have to pay NI for him (company rate) as if he was normal employee?

ceeforcat

The first question of course is - is he self employed? Does he advertise, determine his own hours of work, have headed notepaper, his own business bank account, invoice per job , use his own tools - all pointers towards him being self employed. If he works according to your rules i.e. 9-5, lunch breaks, uses your equipment, paid every week or month he would most likely be an employee and should be on the payroll. Hoever, it is the reponsibility of the employer to be satisfied of the employment status and it does appear that, at some time, someone decided that he was self-employed and has paid him accordingly.

If still satisfied that this is correct I would tell him where to go with regard to his tax affairs. (Most likely he has not told Mr. Taxman.) If not, that is another issue!

Any

He definitely is self employed person, that is not an issue here. He works for other companies, he decides (well, on agreement) when to do the job and he does not use anything of the employer's to do the job. He can refuse job at any time, invoices them on headed paper etc.

My thoughts exactly about the "where to go", just making sure I haven't missed something as surely other companies will/did/should tell him "where to go" and the question still reached me:-)
Thanks

nikki1520

If he's in the construction industry, he may be referring to the CIS Scheme. He needs to be registered for this, as do the company he works for. It isnt something g you can just opt into either- I think it's quite hard to get in now.

Basically, he provides his CIS number and issues his invoice, then the customer pays him minus the tax, which is sent on to hmrc. He will still need to keep records, so when he does his tax return, he knows how much he still has to pay/ how much refund he's due

tyllwyd

Could you employ him on a 'zero hours contract', so that he is an employee of the company but working flexible hours? But he'd be an employee so you'd have to make sure you complied with all the other tax/working time etc etc requirements.

Any

tyllwyd wrote: »

Could you employ him on a 'zero hours contract', so that he is an employee of the company but working flexible hours? But he'd be an employee so you'd have to make sure you complied with all the other tax/working time etc etc requirements.

Errr, but then we would definitely have to pay employer's NI as well as he is employee NI and tax?!
Which we don't want to do, if he thinks he is getting the same rates while we have to sort out the tax and pay NI we might as well employ person to actually do what and when we want them to!

Any

nikki1520 wrote: »

If he's in the construction industry, he may be referring to the CIS Scheme. He needs to be registered for this, as do the company he works for. It isnt something g you can just opt into either- I think it's quite hard to get in now.

Basically, he provides his CIS number and issues his invoice, then the customer pays him minus the tax, which is sent on to hmrc. He will still need to keep records, so when he does his tax return, he knows how much he still has to pay/ how much refund he's due

Well, we are not CIS... Wonder whether that is where the idea came from, have to ask whether he is CIS.. (but doubt it).

ceeforcat

If he is self-employed he can sort out his own tax. You have no responsibility and that is what I would be telling him.

Any

ceeforcat wrote: »

If he is self-employed he can sort out his own tax. You have no responsibility and that is what I would be telling him.

Yes, that is what I would be telling him, but I bet he is a friend of the boss or ex close colleague or something and that is why someone is even entertaining the idea...

Savvy_Sue

It's normal to pay an employed person at a lower rate, I think 1/3 premium has been mentioned in other threads, so the answer would be "we could take you on as employed on a zero hours contract, but we'd have to drop your hourly rate by 1/3, is that OK with you?"

You would of course then have to pay holiday pay, which you can calculate as 12.07% of gross pay and pay out as and when (we do it on a quarterly basis). You wouldn't have to pay NI in the weeks they didn't earn over the Lower Earnings Limit, and you wouldn't have to pay sick pay because they would only be working when you wanted them, and you wouldn't want them when they weren't fit to work.

Oh, naturally they'd lose the right to say "No, I don't fancy working this week", so you'd get first call on their services over all the other places they work.

You could save money! IF they accept the lower rate of pay!

noh

Oh, naturally they'd lose the right to say "No, I don't fancy working this week", so you'd get first call on their services over all the other places they work.

I have 2 casual zero hour contracts with different employers. Both explicitly state that I an not obliged to accept any work offered.
Therefore, at least in my case, your statement is not correct.
I have in the past turned down work from one employer in favour of the other who happens to pay more.