Consequences for employer of putting me PAYE instead of self employed?

Itsadogslife_2

I just wondered whether anyone could explain to me what the consequences would be if my employer were to make me PAYE instead of self employed. I have worked for her now for 2.5 years and work on average 23 - 25 hours per week.

I would imagine holiday pay would have to be factored in but my yearly wage so far has varied around the £8,000.00 mark. Would it be very difficult for her (she is a limited company but is the sole employee her wages are paid through dividends), to make me PAYE instead? Does it involve her contributing to NI and tax? At the moment I pay my own NI contributions?

LittleVoice

Itsadogslife wrote: »

I just wondered whether anyone could explain to me what the consequences would be if my employer were to make me PAYE instead of self employed. I have worked for her now for 2.5 years and work on average 23 - 25 hours per week.

I would imagine holiday pay would have to be factored in but my yearly wage so far has varied around the £8,000.00 mark. Would it be very difficult for her (she is a limited company but is the sole employee her wages are paid through dividends), to make me PAYE instead? Does it involve her contributing to NI and tax? At the moment I pay my own NI contributions?

Sounds like you could have been an employee for 2.5 years already. Is she/her company your only client? Have HMRC confirmed you are self-employed in their eyes?

An employer pays employers NI. They don't contribute to your own NI or tax but do deduct those from your pay.

However, if you were really her/the company's employee for all that time up to now, they will be deemed to have paid you net of tax and NI and will have to hand over the total tax and NI to HMRC - and you would get a rebate.

They would also have to give you paid holidays. I would imagine that your hourly/weekly rate would be reduced to compensate for this.

patman99

Yes, your employer will have to make NI contributions. Also, your holiday pay will have no affect on your wages. She should accrue your holiday pay at 12.07% of the hours worked & should not take that 12.07% from your hourly wage.

You say that you have been s/e with the employer for 2.5 years, but do they supply you with work, tools, a place to work & tell you what hours you must work ?. If so, then for the last 2.5 years they have been in breach of HMRC Rule 35.

LittleVoice

LittleVoice wrote: »

They would also have to give you paid holidays. I would imagine that your hourly/weekly rate would be reduced to compensate for this.

Of course the rate could not be reduced below NMW. It's not clear how close you are to that already. As a self-employed person NMW would not apply.

Itsadogslife_2

No she is not my only client, she is my main client but I do work for another lady as well so I would still have to stay self employed for her business.

She provides me with a place of work with her, but I also have a home office set up and work from home as well. I do work mostly what she asks me or tells me to do but only because I am amenable like that - if I didn't want to do it, that would be fine

patman99

The crux would be 'could you send someone else to cover your role if you are ill'?. If 'No', then you are already treated by her as PAYE.

Takeaway_Addict

patman99 wrote: »

The crux would be 'could you send someone else to cover your role if you are ill'?. If 'No', then you are already treated by her as PAYE.

I don't get how this can be the crux?

If I have a self employed electrician working for me and they can't get in one day then thats not PAYE?

Mistral001

I have just done a few quick sums and it would appear that at average 24 hrs per week that means 24x52 = 1248 hours per year which make your hourly rate £6.41 per for £8000 a year.

Now if your employer changed to PAYE there would additional costs that the employer would have to pay, namely holiday pay and employers NI contributions. I am not sure exactly how much additional that would cost your employer but it is very likely that if she wanted you to cost her the same per hour as you are costing her now, she would actually have to pay you less than the minimum wage.

As well as that she would have the admin costs of registering as an employer and sending in returns regularily PAYE authorities.

It would appear that in real terms you are presently working for below the minium wage. Many self-employed people work for less than the minimum wage but it is usually because they are building up the business or going thorugh a downturn.