Should I go CIS? (Self employed)

Tomandlauren2015

Hello, I have been working (on the books) for my employer for 14 months and I am quite happy with the job. I asked my employer for a pay rise and he responded, I will increase your wage by 20% if you go CIS (self employed). That is an increase that would help me an awful lot as my fiance and I are getting married next year. I am just trying to weigh out the pro's and con's of this and any input from you guys would be fully appreciated.

Thanks in advance.

Andy_L

If you only work for him then its unlikely that HMRC would class you as self-employed.

You're likely to lose out on holiday pay, sick pay, employers pension contributions.

Tomandlauren2015

About 80% of workers are self employed. Providing a service to my employer and getting paid by my employer, paying 20% tax and claiming tax back on expenses etc. Annually (about 2k each per year). I would be earning nearly an extra week's wage each month so decent rise. I understand about holidays and pension but is that the only price to pay for coming off the books and going CIS, because if it is I would be silly to turn it down... right?

NYM

So you're not bothered about no sick pay or holiday pay?

phill99

And if you go CIS you have absolutely no employment protection whatsoever. He could get rid of you overnight an you have no recourse whatsoever.


Or he could say that he has no work for you next week, so don't bother coming in. And then the week after he may only have 3 days work for you. The days you don't work, you don't get paid for.


Plus you lose on 4 - 5 weeks holiday each year, Christmas shutdown, sick pay, you have to contribute 100% of your pension payments, get reduced Unemployment benefits. And all for the potential 'I might make another weeks money each month'.


With subcontracting the odds are stacked massively in favour of the 'boss' and very much against you. That's why he's offering more money as he knows that he will have massive savings as a result.


Sorry, but you would be the biggest of fools.

Tomandlauren2015

We dont grt sick pay and only 28 days holiday. The tax back claim each year will cover my holiday loss and I then get to choose if I even want to take aby holiday. Also 20% rise in wage its the equilevant of getting paid an extra day every week right, so essentially i am benefiting by 52 days a year. 52 is nearly double the 28 days holiday i currently get. Or am i getting lost?

Tomandlauren2015

Thank you phill99 that is the info i am looking for. I am struggling to see the "cons" in this so your reply is helpful. The security is the main thing but i have been there 14 months, cant they dismiss me with no reason up to 24months anyway? Meaning i have to work there for another 10 months befoere i am secure anyway. And by that time if i go self employed I would have earned the equivelant of 2 extra months pay?

Like I say I am trying to weight up pros and cons. My missis is telling me to do it my mom is telling me not to so you can appreciate, i need to do the right thing lol

dancing_star

You'll have to submit a tax return every year to reclaim the CIS, so you won't get the refund until you've done that. And if you aren't confident doing your own tax return you'll need to pay an accountant to do it.

NYM

Tomandlauren2015 wrote: »

We dont grt sick pay and only 28 days holiday. The tax back claim each year will cover my holiday loss and I then get to choose if I even want to take aby holiday. Also 20% rise in wage its the equilevant of getting paid an extra day every week right, so essentially i am benefiting by 52 days a year. 52 is nearly double the 28 days holiday i currently get. Or am i getting lost?

How can you not get SSP ?

It's not a 20% increase in your salary. You've still got to pay tax and NI contributions. What you will lose is the SSP and holiday pay and have the headache of doing a tax return.

Tomandlauren2015

I have never claimed SSP touch wood.but I see your point. And I have an accountant that can do it annually for £120.

Also, what I wanted to ask, slightly off topic but, my employer also transferred me from one part of the company to another meaning i get paid by a different vat registered company. So does my service from current employer start from my initial start date of the date of the transfer. They never told me about this btw it was HMRC that told me, but would mean I currently only have 6 months servece if the latter.

phill99

I run a property maintenance company and have about 18 guys on sub-contract CIS. None of them permanent. Some do a week or so here on a project, a couple of days the next week and so on. They are paid only when they produce an invoice. The good thing for me is that I don't have a wages bill that I have to pay regardless of cash flow. I don't pay NI contributions. I take 20% from them and hand it over to HMRC on their behalf. For me its ideal. But for them (they also work for other builders etc) they all hate Christmas as there is a two week industry shut down, for which they don't get a penny. If they take holiday, they don't get a penny.


Respectfully, your wife is seeing it purely in financial terms. There maybe the potential of a short term gain financially, but long term I can guarantee, you will be worse off. At the moment your employer has to pay you regardless of his income. He is contracted to pay you a set sum each week. But when work dries up, and it will he simply says I only want you for 2 days this week, or nothing until September. Also he can simply say 'I'm not pay you (say) £150 a day. I'm only paying £120 a day as there are plenty of guys that will work for that rate'. And trust me there will always be someone who will do it cheaper. He will have no loyalty to you at all.


You will get a tax rebate. I don't know anyone that doesn't under CIS. But it wont be what you think as you still have to pay some tax. Don't be so naïve as to think you will be getting it all back.


Your Mum is very right in this instance. Listen to her wisdom.