Sole trader

Bolt1234

Hi All,  I have had nearly 40 years as PAYE and have now been advised by an accountant to become a sole trader. I am doing some work for a small business and invoicing them my hours.  It’s on a 4 month trial and could become permanent. Hours over 1 year equate to £20k.

Could someone guide me please. I work from home. Should I bill for my mobile, broadband, landline etc. They buy my stationery although I am using my own equipment. I understand I will be paid gross and am responsible for my tax.  Are there any websites I can refer to as to what can I claim?  I will keep back a fair amount to pay my tax (circa 40%). I am also in receipt of a private pension at £25k per year plus a redundancy payment of £100k spread over 3 years.  I have had the first £30k free of tax last year. This years payment of £30k has been taxed at a straight 40%.

Happy to go back to accountant but want to collate some info before I do.

MinuteNoodles

If you're employing the services of an accountant they should be telling you all of this, that's what they're getting paid for.

If you're using your mobile, broadband, landline purely for your business then you can claim them but if you're using them for both personal and business you can only claim the percentage which is business use. You can also claim for using your home, it's a flat rate of £6 a week if its a room that's shared use or you can claim the percentage of the rent/mortgage interest that that room forms of the home if it is used solely for business.

General_Grant

Bolt1234 said:

Hi All,  I have had nearly 40 years as PAYE and have now been advised by an accountant to become a sole trader. I am doing some work for a small business and invoicing them my hours.  It’s on a 4 month trial and could become permanent. Hours over 1 year equate to £20k.

Could someone guide me please. I work from home. Should I bill for my mobile, broadband, landline etc. They buy my stationery although I am using my own equipment. I understand I will be paid gross and am responsible for my tax.  Are there any websites I can refer to as to what can I claim?  I will keep back a fair amount to pay my tax (circa 40%). I am also in receipt of a private pension at £25k per year plus a redundancy payment of £100k spread over 3 years.  I have had the first £30k free of tax last year. This years payment of £30k has been taxed at a straight 40%.

Happy to go back to accountant but want to collate some info before I do.

The costs involved in running your business are not billed as such to the organisation to which you are supplying services but built into your rate for the work.  
Then, when you work out your profit, you deduct the value from your invoiced income.

Dox

Start here: https://www.gov.uk/browse/business

Savvy_Sue

Bolt1234 said:

Hi All,  I have had nearly 40 years as PAYE and have now been advised by an accountant to become a sole trader. I am doing some work for a small business and invoicing them my hours.  It’s on a 4 month trial and could become permanent. Hours over 1 year equate to £20k.

Why? I mean, I don't have to understand why, but I hope you do. Is it REALLY self-employment or a way for the business to avoid paying you holiday pay, sickness and pension contributions? Can you just walk away from the work or send someone else to do it if you fancy a week off?

Bolt1234

Hi Sue, I dont need a pension.  I have plenty from my previous role and they have already confirmed I will get holiday pay at xx days.  I am at an age now where I can take a risk.  I dont know how long this assignment will last and it was my idea to actually be a sole trader. Very small company/ Happy to sort out my own tax.  If it goes on for say 2-3 years is there anything I need to watch out for?

Also I guess I shouldnt bill mobile, broadband etc as I should be providing that.  As I work from home the bb and mobile are both for me and the rest of the household.  

As I am a higher rate tax payer should I put aside say 40% of my fees every month?

Comms69

Bolt1234 said:

Hi Sue, I dont need a pension.  I have plenty from my previous role and they have already confirmed I will get holiday pay at xx days.  I am at an age now where I can take a risk.  I dont know how long this assignment will last and it was my idea to actually be a sole trader. Very small company/ Happy to sort out my own tax.  If it goes on for say 2-3 years is there anything I need to watch out for?

Also I guess I shouldnt bill mobile, broadband etc as I should be providing that.  As I work from home the bb and mobile are both for me and the rest of the household.  

As I am a higher rate tax payer should I put aside say 40% of my fees every month?

Its £20k. It's only just above minimum wage. With absolutely none of the security. I mean do it if you want, but i dont see the benefit of doing this, over working in LIDL

General_Grant

Bolt1234 said:

Hi Sue, I dont need a pension.  I have plenty from my previous role and they have already confirmed I will get holiday pay at xx days.  I am at an age now where I can take a risk.  I dont know how long this assignment will last and it was my idea to actually be a sole trader. Very small company/ Happy to sort out my own tax.  If it goes on for say 2-3 years is there anything I need to watch out for?

Also I guess I shouldnt bill mobile, broadband etc as I should be providing that.  As I work from home the bb and mobile are both for me and the rest of the household.  

As I am a higher rate tax payer should I put aside say 40% of my fees every month?

Self-employed people do not receive holiday pay from their clients: they build it into the charge they invoice their client.  This really doesn't sound like self-employment.

As your other existing income takes you into the 40% bracket, you are right to put aside 40% of your PROFIT for tax.  That is not 40% of your fees because you do have costs to deduct from them - like the proportion of your phone and broadband which relate to your business. 

Have you checked out NI contributions as self-employed?

Bolt1234

Thanks for responding.  I have little in the way of costs, BB, landline and mobile and once lockdown is lifted some car travel.  Maybe £100 per month at most.  Its the working at home that did it for me.  Have worked at home for years previously so know what that entails.  Also, its probably safer to be at home at present.   I dont necessarily need the money although in this current times it is most welcome!   Its rather like temping.  It could last for 6 months or 6 years.  

Comms69

Bolt1234 said:

Thanks for responding.  I have little in the way of costs, BB, landline and mobile and once lockdown is lifted some car travel.  Maybe £100 per month at most.  Its the working at home that did it for me.  Have worked at home for years previously so know what that entails.  Also, its probably safer to be at home at present.   I dont necessarily need the money although in this current times it is most welcome!   Its rather like temping.  It could last for 6 months or 6 years.  

Or a day. Because you arent an employee.

(unless ofcourse you are and they're trying to dodge making those contributions)

macman

A sole client, receiving holiday pay and office supplies?  No way will HMRC consider that to be self-employment.
Who determines your working hours?
S/E is certainly financially better in principle, but as long as you are prepared to have no security-they can drop you without notice, and you will have to bill them monthly and hope you get paid in another 30. And of course no sick pay.
I claim about a third of my utilities (phone, mobile, internet, gas, elec, water) as business expenses, plus you can claim a proportion of your motoring costs, plus business-related capital expenditure.