Self employed to employee

duffs54

As we had not heard anything I wrote this email, it took me an hour writing and re writing as I didn't want it to come across as bolshi:

Hello All

After the team meeting I wanted to get some info together as I found it was all a bit overwhelming really with lots of questions unanswered and some not very clear.



Not sure her name if you have had a meeting with your HR peops yet but I have found all this info online which I am sharing as something which I am not sure if everyone knows about is having to do their tax return earlier than Jan 31st 2015 if becoming PAYE. All this info is on the GOV site. But needs to be confirmed too.



So you might of been online already and looked at some of this but if you haven't you need to know that the timings of your tax returns will change if we are going to be employed, you will have to have your tax return done and filed by 30th Dec as you will then be paying by PAYE. and you need to tell HMRC asap so that the NI payments don't overlap. If you haven't the money to pay your tax by then you can have it added to your PAYE tax for next year, they will adjust your tax code accordingly. Most probably me lol.

Some of the things that were mentioned were that we wouldn't be paying NI and that ***Ltd would be paying it all, but we will be paying our own employee's NI at ~12%, so a lot more than the ~£10 per month Class 2 we pay now. ***Ltd will pay employer's NI at ~13% of your gross pay on top of paying us. Also I'm not sure how the accountant came up with Zero hours contracts not getting paid holiday pay as they do, pro-rata to hours worked.

Employees get 28days (inc or not inc Bank Hols) holiday pay and within the next few years employees must be enrolled into a staff pension scheme.


This wasn't mentioned at the meeting but all through the week all these things have sprung to mind (might be others to): how do we claim for our mobile phones, stationary, office usage, valeting car etc, The mileage we get now is 35p per mile but we can also claim 9p per mile to make up the 44p per mile allowance that HMRC gives which at the moment all of these reduce our tax bill . We can also remain as sole traders and invoice you as we do now.


Once we get all the info from the HR peops on what I have found on the GOV site it might be clearer on how it will work etc.


Of course some of this is academic as some of us might be under the tax radar anyway.



Info here for your perusal:

https://www.gov.uk/stop-being-self-employed

https://www.gov.uk/browse/employing-people

Her reply:

Hello All

Well done Me - can always rely on you to find the information.

No - not seen HR person yet - difficult to find a mutually convenient time.

No - not had time to read the Gov.uk sites.

No - didn't know your tax returns had to be in earlier - but if you've all been putting aside the right amount of money for the tax man it shouldn't be an issue.

Yes - you pay NI - as you have been with all previous employers - ***LTD NI contributions will increase significantly.

Yes - you may well be right about holiday pay - again cost to ***Ltd increases significantly.

Don't know about the stationery, car cleaning, phones or mileage - as soon as I find out you can rest assured you will all be notified.

Not sure how staying as Sole Traders will work as it is the very fact that **Ltd offers you such regular hours that is causing the problem. Regular hours seems to indicate Emplyment rather than Self-employment.

Some of you are under the tax radar - but not all of you.


So I think that is a bolshi reply, i'm happy to be employed if she is paying holiday pay.

SeduLOUs

Nicely worded email. You have posted your name in the reply - not sure if you're bothered but jst pointing out in case you wanted to edit out.

If she is only making 'profit' of £4 per hour on your rates at the moment that will more than likely be wiped out by the Ers NI, general payroll costs, holiday pay and later pension enrolment. She has a lot of reading to do and clearly you are already in the stronger position by understanding the basics and then some.

Good luck! Keep up the good fight!

duffs54

All with the help from peops on here, thank you all xx

She also keeps 4p a mile from our petrol, I can do between 200 -300 miles a week and there are 5 of us, but I think I do the most mileage along with her.

duffs54

Just an update to all those that helped with this post.

I am now employed, 28days holiday no reduction in hourly rate and can now claim my petrol to my first address I visit and back home again after my last visit.

So a result, although I can't claim for things to reduce my tax bill 28day holiday is fab.

cheers all
.

SeduLOUs

Well done! Hope it continues to go smoothly.

I'm concerned about how she can afford not to drop your hourly rate considering the additional costs she now needs to pay on top, but that's not really your problem in the short term. Worst case scenario she will eventually need to start making people redundant or negotiating pay drops with you.

PlutoinCapricorn

If you have been earning enough to pay Class 2 NI as a sole trader, you need to inform HMRC immediately so that you need pay them no longer.

When you complete your self assessment for 2014/15, be sure to complete the Date Ceased Trading field so HMRC will stop expecting you to complete returns.

It sounds as though you have got a good deal now, assuming that the employer is able to meet all her new commitments.

duffs54

Sedulous, she is taking a hit herself by not paying herself a full wage, like most new businesses she will now not be earning a fortune straight away, she has had 3yrs with us all self employed where she was obviously earning quite well, so we will see. She wants to grow the company now which she will have to do. No bad feelings she was just really stressed over it all I think. Thanks for your help with this.


Thank you PlutoinCapricorn, yes I have told them and received confirmation already.

Cheers all xx