Self employed to employee

duffs54

So I am self employed and have been since April 2012, I work for an organisation that provides support for social only support for vulnerable peops etc. Organise my own hours and diary dates etc. Most of my clients come from her

Had a meeting with her yesterday and she announced that she has been advised by her accountant to become a Ltd company, and has told us (5 of us) that we will have to become employees unless we want to register as a Ltd company too to keep our self employed status.

She is becoming Ltd from 1st Dec 2014
She also told us that we would most probably be on a Zero hrs contract as we will be paid hourly as we do different hrs each day/week/month.

She has also said that we won't get holiday pay, now having scoured all the help sites today they all say 'in most cases paid holiday is obligatory of 28days per year'

So does she have to pay holiday pay or can she get round it somehow?

Also looking on the gateway page it says I need to tell them straight away and to work out what I have earned . does that mean I will have to pay tax on 2013/2014 now or will I pay in Jan like before?

Thanks lots, this has been a nightmare searching online.

cheers

PlutoinCapricorn

This sounds very odd. Why can't you just carry on as sole traders? Is she aware of all the regulations that apply when you take on staff?

duffs54

Well her accountant has advised her that as the organisation has grown so much, she started paying VAT this year.

We will still get 35per mile petrol allowance and expenses paid in cash each month.

SeduLOUs

You get 5.6 weeks holiday per year as an employee. This can include bank holidays. If you have a zero hours contract and do different shifts every week then holidays are to be calculated based on average hours worked.

Doesn't sound like she has a clue what she is doing. Can't see any reason why you can't continue as self-employed and just invoice the new Limited Company.

There are a lot of implications to her of employing staff that she probably hasn't given any second thought to, and it just smells like a disaster waiting to happen.

If you did become employed then re tax, you would continue to submit tax return for 2014/2015 which would include your new employment income (which will be summarised for you via a P60 form from your employer in April). Tax re your employment would be collected at source and those amounts entered on your tax return so that you effectively make payment based on your self employed earnings in the same way you do now.

You should inform HMRC as soon as possible if and when contracts are signed if you are no longer doing any self employed work in order to de-register for self assessment, and to prevent overpayment of Class 2 NICs as you will pay NI through payroll instead.

duffs54

So if I invoice her, I don't have to be a limited company myself then?
Getting hol pay would be good, but I like the freedom of being S Employed

Thanks

PlutoinCapricorn

"Doesn't sound like she has a clue what she is doing..."

I completely agree with this, not to mention the rest of the post.

Are you sure that up to now your relationship has been one of freelancer and client, or has what HMRC would consider false self employment been involved?

PlutoinCapricorn

it is very important for all concerned to understand the difference between being an employee and being self employed. Usually freelancers charge more than an employee would get for doing the same work in order to cover gaps between assignments and to compensate for the lack of paid holidays and other benefits.

duffs54

PlutoinCapricorn wrote: »

"Doesn't sound like she has a clue what she is doing..."

I completely agree with this, not to mention the rest of the post.

Are you sure that up to now your relationship has been one of freelancer and client, or has what HMRC would consider false self employment been involved?

Not sure really, when it was set up we were advised by her then accountant that as long as we do our own appts, hours and run our own diaries we were SE, but I think now on reflection maybe we weren't?

So poss her new accountant has now realised this hence the change in her own words she said that more and more smaller companies are being investigated and she didn't want that so maybe that is why we have been employed all along?

I love my job and don't want to give it up.

PlutoinCapricorn

Duffs, what you have said makes sense. Have you looked at HMRC's criteria for genuine self employment?

If you have been employees in all but name all along, she might have to pay NI etc. if HMRC discover this.

duffs54

PlutoinCapricorn wrote: »

Duffs, what you have said makes sense. Have you looked at HMRC's criteria for genuine self employment?

If you have been employees in all but name all along, she might have to pay NI etc. if HMRC discover this.

Me thinks that you are so right! I wish she had been honest with us over this and not just spring it on us with 2 weeks to go!

cheers

PlutoinCapricorn

Ideally, you should be the one who decides whether to take on a PAYE job, be a freelancer or create a limited company. There is something called IR35 legislation that HMRC uses to catch limited companies with one person who works for one client apparently an employee in all but name...