S/employed dilemma hourly rate after retirement

bullinn1

Not sure if this is the correct forum.

Hi chaps, I've been taking photographs for a local company for a couple of years now and charging £12/hr for maybe 30 hours over a month and it didn't impact on my tax position (I have a £6k/yr personal pension) - now I've passed 65 and receive £7k/yr oap my earnings over and above the £13k are going to be taxable, (subject to a small allowance for the self employment expenses). This means, in effect, that after tax I'll now be earning about £8/hour. I'm a bit concerned about this as I feel the contribution I make to the firm I work for and my time and my skills are worth more than this.

Simple, I think, I'll just put my hourly rate up to £16 but, of course my boss will be outraged ... I can hear her now "how can you increase your bills by a third overnight" ? - I have some sympathy !

Before I go to the meeting can anyone offer me any advice please.

Many thanks

Roger

soolin

If you are self employed you don't have a boss, so don't need to worry about his temper. As a self employed photographer you are perfectly entitled to increase your rate but why don't you also look for more work at the new rate as well?

bullinn1

Thank you soolin ... I appreciate that she's not my boss but I she does employ me and yes I am entitled to raise my rate but if she feels that it's unacceptable and tells me to go I lose a good client ... when I get other work (which sometimes happens) I will be charging the new rate ... I guess my question was asked in the hope that someone could suggest an alternative though, of course, I don't think that there is one .... good of you to take the time ... Roger

LittleVoice

rogertb wrote: »

. . . and charging £12/hr for maybe 30 hours over a month and it didn't impact on my tax position (I have a £6k/yr personal pension) - now I've passed 65 and receive £7k/yr oap my earnings over and above the £13k are going to be taxable, (subject to a small allowance for the self employment expenses). This means, in effect, that after tax I'll now be earning about £8/hour. . . .

If you were receiving £12 x 30 x 12 plus £6K, you were paying some tax and NI on your self-employed earnings, weren't you (assuming you were thinking of last tax year). So your nett rate was already below £12.


Why do you think it is only above £13K that you would be taxable?


How do you work out that £12 after tax is £8? Do you have other income which takes you into higher rate tax?

PasturesNew

The tax on £12 is £2.40.

bullinn1

Thanks again ... I was using very very round figures, ie my hourly rate is actually £12.50 and 30 hours is a good month, I often only do 15 ... it was the 'principal' of the dilemma I was hoping for comment on not my maths .... not to worry I'll go give an accountant some money, at least I can claim it as a business expense ....

anamenottaken

rogertb wrote: »

Thanks again ... I was using very very round figures, ie my hourly rate is actually £12.50 and 30 hours is a good month, I often only do 15 ... it was the 'principal' of the dilemma I was hoping for comment on not my maths .... not to worry I'll go give an accountant some money, at least I can claim it as a business expense ....

I suppose that the response you would get from your client in respect of a price hike would depend on the magnitude of the increase and what might be viewed as the going rate for the job. Is it something which has to be quoted on an hourly basis or per completed assignment?

If you suddenly asked for an extra 33.3% (as originally envisaged) when you might really be experiencing a much lower reduction in your "take home" rate (probably now saving on NI for instance and you have hinted at expenses needing to be deducted from the gross figure too before looking at tax), then it would be more likely to meet resistance.

You do need to look at the maths in order to inform your principle.

bullinn1

Thanks anamenottaken - good points (though being an oap means i don't pay NI) ... I guess I just need to bite the bullet and see what the reaction is ....

HappyMJ

You could put your rate up from £12 to £14 immediately and in a year put it up to £16 which wouldn't be so much of a shock to your clients as a single jump from £12 to £16.

anamenottaken

rogertb wrote: »

Thanks anamenottaken - good points (though being an oap means i don't pay NI) ... I guess I just need to bite the bullet and see what the reaction is ....

That's why I mentioned a saving re NI. Originally (though depending on when you started) your SE earnings would have been subject to NI for any tax year that you were under State retirement age at the beginning.

bullinn1

Excellent MJ eases the pain on both sides ... share the pain ! - exactly what I wanted from this post a look from another angle, now why didn't I think about that as a solution ... Roger