A strange offer from work

welshguy_456

Didn't really know where to put this so I'll start here.

I am 23 years old and work as a car salesman. Yesterday we were sat down in work and told about the possibility of being offered to change our roles from car salesmen to 'consultants' to the company.

By doing this we would effectively go self employed and there would be tax relief benefits which would equate to about 3k a year based on an average earning of 25k, the more pay of course the greater the benefit.

What I am concerned about it that I don't own a home (currently saving for a deposit) and I have read somewhere it can be harder to get a mortgage if you are self employed.

Nothing else really changes to our contracts, there are of course savings to be made by the company so it is sort of a win-win for everyone but I just wanted someone else's thoughts.

Apparently this sort of scheme is available for people who's main salary is commision based and started off in the recruitment industry, then estate agents and is now heading for the showrooms.

One thing to mention is that it is entirely optional too.

Any pointers or words of wisdom would be much appreciated.

Thanks
Chris

duchy

If you are self employed you have no job security and could be let go/have your pay rates dropped at any time. No sick pay either. Yes it's good for the company and they are trying to sell it as good for you by talking about the tax savings (don't forget the cost of an accountant to sort out your annual tax return if you don't want to do it yourself and remembering to keep all the paperwork) but it may not be the good deal it seems at first depending on your individual circumstances.

bengalknights

Just remember you have no annual leave entitlement either or sick as beings self employed you really are on your own.

GavB79

Sounds like they are trying to evade paying employers' NI. If you are 'self-employed' but only work for one company, HMRC still deem you as employed so if you don't pay your taxes they will pursue the company for them

McKneff

It's the HMRC who decides who is and who is not 'self employed'.

No security, no sick pay, no paid holidays, you would be mad to take up this offer.

billsavings

I guess HMRC would take a great deal of interest in this scheme.

schneckster

Say a loud and unambiguous "NO" and maybe look for another job.

This is a way of getting out of paying employers NI. As far as HMRC are concerned, if you have no other clients in a 12 month period, you're an employee. If HMRC catch wind of this, you and the company will get hit for back dated tax with interest, plus fines.

And as self employed, you can reduce your income tax by a lot - but HMRC will want it back when they find out. And they will.

An example - a courier company down south used self employed drivers, but those drivers only worked for this company. Tax man found out, said all drivers are employees, and hit everyone for back dated income tax and NI all plus interest, and fined the company £15k. It closed it's doors as a result. It sent shockwaves through the rest of the courier community and there were plenty of panicked faces around (I had 6 regular clients and another 15 ad-hoc in any 12 months so I knew I was safe).

Mortgages are more difficult to get as self employed as you have to show history, but I wouldn't touch this idea with a barge, let alone a barge pole!

Good luck,

Schneckster

rach

There's also something about being deemed as 'employed' by HMRC if you're registered as self employed but only do work for one company. I'd steer clear of this!

Crispy796

I think going self employed will allow the company to terminate your contract with no penalties or notice. Not sure about all the other HMRC ramifications but I don't think I would be keen to sign up.
I would like to know, short of the company going bankrupt, I would get redundancy and notice before being booted out!

lcharm

Agree with what most people say above. The only time being self employed is actually worth it is if you are actually working for yourself in your own business.

This really does sound like they are trying to make it easier on themselved to terminate their employees as they don't have to offer redundancy packages.

One thing I would say though about the self-employed but working for 1 company argument which is slightly incorrect. Remember you are only 1 person with 1 brain and 1 pair of hands and you can only be in 1 place at a time. Lots of people are self employed but work on contracts for only 1 company on projects for anything up to 1-2 years because they have to devote all their time to it until the project is over and they have to look for more contracts.

freelancegal

Agree with the other posts. I can't see any benefit to you. Also, I have no idea what they are basing their figures on, but even best case, it doesn't sound right, does it??