Self employed or employed?

DemiDee

I'd really appreciate some advice. For many years, I've been self employed, working mainly as a brand ambassador for various promotional agencies on a very ad hoc basis. I would bill as being responsible for my own tax and national insurance, and would be paid as such.

Recently however, many agencies are taking tax at source regardless, which means those on a low overall yearly income have to wait up to a year or more to reclaim money for work done.

Work like this ticks all the 'self employed' boxes: I don't have to provide my own materials, I can choose whether to take each job or otherwise, I get no holiday or sickness pay. So I am confused as to why tax is being taken at source for such work, unless there has been a recent change in the law which I am unaware of.

Many thanks in advance for any help or advice, especially from fellow 'self employed' jobbers!

PlutoinCapricorn

I hope that you will get a better answer from someone in the same position as you are: I am self employed but I don't work via agencies and get paid gross.

Have you asked any of the agencies why they are deducting tax? Surely you are an employee or casual worker and should be getting pro rata holiday and sick pay if they are, possibly on a zero hours contract? I thought that this only happened to people in the construction industry under CIS. It seems that you are getting a bad deal; do you still invoice the agencies? Could you go direct?

DemiDee

Thank you, Pluto. This has only become an issue over the past year since previously, I was always treated as self employed. I have asked several times, and each time the answer is the same: 'We have to tax everyone by law'. More recently, I was told that this is the way the system is set up and they cannot alter it. I always invoice and always state on my invoices that I am self employed and responsible for my own tax and national insurance. This has always been sufficient in the past but over the past year, the agencies I've registered with have simply ignored it, and stand by their claim that their taxation of everyone is the law. If it is, it contradicts the IRS' own documents pertaining to the nature of self employment.

PlutoinCapricorn

I would ask them to show you where they found this law. You say this started over the past year: does this mean since April 6th 2011?

PlutoinCapricorn

I found this: it does seem that agencies can be required to deduct tax and NI. it confirms that it is best to go direct or operate through some company, otherwise you get the worst of both worlds.

http://www.contractorfriend.co.uk/articles/new_to_contracting/view/agency-paye-schemes

DemiDee

This is really interesting, even if disheartening because no major brand will go through an unknown company to source work, as opposed to a known and established agency, neither will they employ people directly without agency involvement. Sadly, the two pretty much always work hand-in-hand with this kind of work. However, the link you have kindly found shows that at the very least, they should be paying my NI as well as pro rate holiday pay I would guess. Thank you for all your time and help, Pluto. It's been invaluable.

antrobus

DemiDee wrote: »

...
Recently however, many agencies are taking tax at source regardless, ...

What exactly do you mean by "the agencies are taking tax at source"? Are they simply deducting tax at 20% or are they applying PAYE?