'suggested' i go self-employed

Her_sister

My boss has suggested I become self-employed. He says the business can't sustain me as an employee. This is not what I want, but I feel a bullied into accepting this. We are a small business (2 partners) and me. 

Devongardener

Under HMRC rules you can’t be classified as self employed if you only have on source of income, presumably your current employment.  You have to show that you trading as a business with other customers.    

Tucosalamanca

Her_sister said:

He says the business can't sustain me as an employee.

As self employed, the costs of employment need to be covered (sick, pension, holidays, insurance, admin etc)
You would need to bill him a similar amount to what it's costing him, if not more to cover your additional overheads.

If he can't sustain you, he's effectively asking you to take a pay cut, as well as waive your employment rights.

Time for a new role elsewhere?

elsien

This.^^^^

Aside from the fact that you weren’t be self-employed and he’s doing it to fiddle the tax man, i’m guessing it doesn’t come with the associated pay rise needed to cover all the additional costs for you.
probably also a last ditch attempts to get out of paying redundancy if they genuinely can’t afford to keep you. 

Hoenir

Her_sister said:

My boss has suggested I become self-employed. He says the business can't sustain me as an employee. This is not what I want, but I feel a bullied into accepting this. We are a small business (2 partners) and me. 

I suspect he's attempting to break the news to you as best he can. Never pleasant making people redundant. While you might feel bullied. The business cannot sustain you financially as matters stand. That's the cold hearted reality. Nothing personal. 

DullGreyGuy

Devongardener said:

Under HMRC rules you can’t be classified as self employed if you only have on source of income, presumably your current employment.  You have to show that you trading as a business with other customers.    

Which rule @devongardener? 

https://www.tax.service.gov.uk/guidance/check-employment-status-for-tax/start/disclaimer is their CEST tool, if you answer everything slanted towards a self employed person but declare you have not had any other clients in the last 12 months it still determines you are Self Employed. As per the disclaimer, HMRC are bound by the tools decision. 

Unfortunately this "must have more than one client" is the usual urban myth. It's a factor but not binary. 

Her_sister said:

My boss has suggested I become self-employed. He says the business can't sustain me as an employee. This is not what I want, but I feel a bullied into accepting this. We are a small business (2 partners) and me. 

For it to be sensible for you to consider it you'd need a notable increase in your hourly rate to reflect the loss of holiday, sick pay, pension etc. It's unlikely to be cost positive for them unless you basically are willing to take a pay cut. 

It could be worth sitting together to do the CEST assessment with the partners as if they won't allow you to have a substitute, want to control your hours/location etc then the CEST will likely determine you are an employee. 

How long have you worked for them? Over 2 years?

Elliott.T123

Devongardener said:

Under HMRC rules you can’t be classified as self employed if you only have on source of income, presumably your current employment.  You have to show that you trading as a business with other customers.    

Not entirely true, that is one element that is factored in but if you are genuinely trading as self employed but choose to only have one client and so one source of income that could still allow you to be self employed.

I run a Ltd co and currently only have one client as they keep me so busy (it is a proper B2B relationship absolutely zero chance of IR35 or being argued I am employed). 

But if you have been worked for the same company as an employee and they are now asking you to go self employed then it is highly likely this is disguised employment.

Grumpy_chap

Her_sister said:

My boss has suggested I become self-employed. He says the business can't sustain me as an employee. This is not what I want, but I feel a bullied into accepting this. We are a small business (2 partners) and me. 

Is the business making the OP redundant?
And then suggesting they may be able to offer some volume (presumably not full time / regular) if you then contracted back on a self-employed basis?
What would the contract arrangements look like for that self-employment?
Would the hourly / piece-work rates be suitably uplifted to cover the business overheads that are currently through pay-roll.
Converting from employed with company A and then contracting to company A does not become an automatic inside-IR35 determination.

Her_sister

Thank you for all your replies. I appreciate the responses. I receive an hourly rate (11.00) and I get 20% of all sales. Usually taking 3,500 - 4,000 net. Redundancy isn't an option as we are too busy.

Andy_L

"He says the business can't sustain me as an employee."

"Redundancy isn't an option as we are too busy."

hmmm. I'm torn between "they're trying to screw you over" and "they don't know how to run a business" (with a good chance of it being both)

DullGreyGuy

Do you have over 2 years service? If so they cannot just get rid of you but either is redundancy or misconduct. 

How about rebalancing the salary/commission to move it to more commission based? Could be done on a theoretically cost neutral basis but means if you undersell they pay you less than they currently do but if you over perform you get paid more than you currently are but with the extra sales they should be able to afford you. 

You'll always have the safety net that minimum take-home has to equate to NMW or better if you have a dire month.