Self employed or Employed which best for tax

Herbert444

Any advice on this one would be gratefully received... Partner got made redundant from the Building trade 4 years ago and since then we have had to declare ourselves bankrupt. He has since been making a small living through being self employed. He has recently been offered a job in London living away from home. I want him to become employed- he wants to see if the company will take him on as a contractor because he believes he would pay the lower amount of tax ( he would be fortunate to be on over £40k a yr)and could get refunds on his rent etc if he stayed self employed. Just wondered what others thought? thanks

agrinnall

He's probably right that he could claim expenses, including travel and accommodation, against his tax if he's self employed, as long as he doesn't work at the same place for more than 2 years. Of course, the real issue is whether he can actually be self employed in the job, under normal circumstances it's not a choice that can be made, it's dependent on the facts of the situation. However, I don't know if construction has some special rules that may apply.

Savvy_Sue

How much over £40k? You don't actually start paying 40% tax until you're at something like £42k, I think ...

bikeulike

I think you will find that 40% tax starts at just over £30,000.

gb12345

bikeulike wrote: »

I think you will find that 40% tax starts at just over £30,000.

Not if you allow for the £9.5k personal allowance that increases it to the £42k that Savvy_Sue mentioned

Funky_Bold_Ribena

bikeulike wrote: »

I think you will find that 40% tax starts at just over £30,000.

I think you will find it doesn't.

Herbert444

Thanks everyone for your replies but we're talking £45k so over in all cases.

Savvy_Sue

There are other things he could do if he was employed to reduce his tax bill, pension contributions for example.

Personally, I'd talk to an accountant about the options. Although strictly speaking it's not his decision, or the company's decision, it's HMRC who rule, but in the building trade it's far more common to subcontract out.