Self employed v employed

Lisa1978
Lisa1978 Posts: 316 Forumite
First Post First Anniversary Combo Breaker
Hi, 

A friend is earning £12.50 an hour and has been offered a job elsewhere at £750 a week (which is much more than they are earning).  They had verbally accepted the job but their current employers don't want to lose them.  The issue is they can't increase their hourly rate as others who have been there longer are on not much more.  

Today they have offered him to go self employed instead, offering £500 a week. 

He's finding it hard weighing everything up as he loves his current job/what he does and the other staff.  The newer job is just him and the owner and a lot of harder graft and possibly longer hours especially over the summer months. 

Can anyone please provide calculations laying out if the self employment is worthwhile? I know he will lose PAYE benefits including sick pay/holiday pay/pension etc! 

Thanks 

Comments

  • Ferro
    Ferro Posts: 301 Forumite
    First Post Name Dropper
    The bigger issue is whether or not he will be regarded as self-employed by HMRC while clearly working for one person. I doubt it. 


  • Lisa1978
    Lisa1978 Posts: 316 Forumite
    First Post First Anniversary Combo Breaker
    Ferro said:
    The bigger issue is whether or not he will be regarded as self-employed by HMRC while clearly working for one person. I doubt it. 


    Thanks, i've taken the quiz and it does come back as 'employed' status.  
    I know his employer has stated that he wouldn't be 'solely working for them' and is free to work for others but at the same time i think they would be looking for him to do a lot of hours/week. 
  • Veteransaver
    Veteransaver Posts: 476 Forumite
    Name Dropper First Post
    Lisa1978 said:
    Hi, 

    A friend is earning £12.50 an hour and has been offered a job elsewhere at £750 a week (which is much more than they are earning).  They had verbally accepted the job but their current employers don't want to lose them.  The issue is they can't increase their hourly rate as others who have been there longer are on not much more.  

    Today they have offered him to go self employed instead, offering £500 a week. 

    He's finding it hard weighing everything up as he loves his current job/what he does and the other staff.  The newer job is just him and the owner and a lot of harder graft and possibly longer hours especially over the summer months. 

    Can anyone please provide calculations laying out if the self employment is worthwhile? I know he will lose PAYE benefits including sick pay/holiday pay/pension etc! 

    Thanks 

    Isn't £12.50 around £500 a week anyway? (depending on hours)
    Tax wise he wouldn't really be much better off, and may need to pay an accountant and will need to do self assessment returns. He would be able to offset some costs like running a van etc, but would have little security. But then current employer should be reimbursing him for certain things like business mileage /expenses anyway if he's using his own car/ tools.
    It sounds like a bad deal to go self employed for the same money, as it isn't actually any more money and there's a big loss of job security / sick pay and other rights. Even putting aside the fact that if he's only working for one employer it could be seen as disguised employment anyway, so could raise issues depending on the nature of his work.

  • Ferro
    Ferro Posts: 301 Forumite
    First Post Name Dropper
    edited 7 March at 8:14PM
    Lisa1978 said:
    Hi, 

    A friend is earning £12.50 an hour and has been offered a job elsewhere at £750 a week (which is much more than they are earning).  They had verbally accepted the job but their current employers don't want to lose them.  The issue is they can't increase their hourly rate as others who have been there longer are on not much more.  

    Today they have offered him to go self employed instead, offering £500 a week. 

    He's finding it hard weighing everything up as he loves his current job/what he does and the other staff.  The newer job is just him and the owner and a lot of harder graft and possibly longer hours especially over the summer months. 

    Can anyone please provide calculations laying out if the self employment is worthwhile? I know he will lose PAYE benefits including sick pay/holiday pay/pension etc! 

    Thanks 

    Isn't £12.50 around £500 a week anyway? (depending on hours)
    Tax wise he wouldn't really be much better off, and may need to pay an accountant and will need to do self assessment returns. He would be able to offset some costs like running a van etc, but would have little security. But then current employer should be reimbursing him for certain things like business mileage /expenses anyway if he's using his own car/ tools.
    It sounds like a bad deal to go self employed for the same money, as it isn't actually any more money and there's a big loss of job security / sick pay and other rights. Even putting aside the fact that if he's only working for one employer it could be seen as disguised employment anyway, so could raise issues depending on the nature of his work.

    The savings made by the employer on employer’s NI and pension contributions are not insignificant. £750 under PAYE at the other job is the only real option here for me. 
  • Lisa1978
    Lisa1978 Posts: 316 Forumite
    First Post First Anniversary Combo Breaker
    Lisa1978 said:
    Hi, 

    A friend is earning £12.50 an hour and has been offered a job elsewhere at £750 a week (which is much more than they are earning).  They had verbally accepted the job but their current employers don't want to lose them.  The issue is they can't increase their hourly rate as others who have been there longer are on not much more.  

    Today they have offered him to go self employed instead, offering £500 a week. 

    He's finding it hard weighing everything up as he loves his current job/what he does and the other staff.  The newer job is just him and the owner and a lot of harder graft and possibly longer hours especially over the summer months. 

    Can anyone please provide calculations laying out if the self employment is worthwhile? I know he will lose PAYE benefits including sick pay/holiday pay/pension etc! 

    Thanks 

    Isn't £12.50 around £500 a week anyway? (depending on hours)
    Tax wise he wouldn't really be much better off, and may need to pay an accountant and will need to do self assessment returns. He would be able to offset some costs like running a van etc, but would have little security. But then current employer should be reimbursing him for certain things like business mileage /expenses anyway if he's using his own car/ tools.
    It sounds like a bad deal to go self employed for the same money, as it isn't actually any more money and there's a big loss of job security / sick pay and other rights. Even putting aside the fact that if he's only working for one employer it could be seen as disguised employment anyway, so could raise issues depending on the nature of his work.

    He currently does 36 hours a week.  They told him it would be an extra £125 a week.  My view is for a possible additional £500 a he's taking on a lot of other issues with lack of sick pay/rights/holiday pay etc.  I personally don't see many benefits but wanted to check other opinions.  A few weeks ago he was so ready for this other £750 a week job and can't see the woods for the trees now as everything is clouded.  I guess he's worried to take the leap now. 
  • Ferro
    Ferro Posts: 301 Forumite
    First Post Name Dropper
    Lisa1978 said:
    Lisa1978 said:
    Hi, 

    A friend is earning £12.50 an hour and has been offered a job elsewhere at £750 a week (which is much more than they are earning).  They had verbally accepted the job but their current employers don't want to lose them.  The issue is they can't increase their hourly rate as others who have been there longer are on not much more.  

    Today they have offered him to go self employed instead, offering £500 a week. 

    He's finding it hard weighing everything up as he loves his current job/what he does and the other staff.  The newer job is just him and the owner and a lot of harder graft and possibly longer hours especially over the summer months. 

    Can anyone please provide calculations laying out if the self employment is worthwhile? I know he will lose PAYE benefits including sick pay/holiday pay/pension etc! 

    Thanks 

    Isn't £12.50 around £500 a week anyway? (depending on hours)
    Tax wise he wouldn't really be much better off, and may need to pay an accountant and will need to do self assessment returns. He would be able to offset some costs like running a van etc, but would have little security. But then current employer should be reimbursing him for certain things like business mileage /expenses anyway if he's using his own car/ tools.
    It sounds like a bad deal to go self employed for the same money, as it isn't actually any more money and there's a big loss of job security / sick pay and other rights. Even putting aside the fact that if he's only working for one employer it could be seen as disguised employment anyway, so could raise issues depending on the nature of his work.

    He currently does 36 hours a week.  They told him it would be an extra £125 a week.  My view is for a possible additional £500 a he's taking on a lot of other issues with lack of sick pay/rights/holiday pay etc.  I personally don't see many benefits but wanted to check other opinions.  A few weeks ago he was so ready for this other £750 a week job and can't see the woods for the trees now as everything is clouded.  I guess he's worried to take the leap now. 
    He would have to find his pension himself - no employer contributions. 
  • Veteransaver
    Veteransaver Posts: 476 Forumite
    Name Dropper First Post
    Ferro said:
    Lisa1978 said:
    Hi, 

    A friend is earning £12.50 an hour and has been offered a job elsewhere at £750 a week (which is much more than they are earning).  They had verbally accepted the job but their current employers don't want to lose them.  The issue is they can't increase their hourly rate as others who have been there longer are on not much more.  

    Today they have offered him to go self employed instead, offering £500 a week. 

    He's finding it hard weighing everything up as he loves his current job/what he does and the other staff.  The newer job is just him and the owner and a lot of harder graft and possibly longer hours especially over the summer months. 

    Can anyone please provide calculations laying out if the self employment is worthwhile? I know he will lose PAYE benefits including sick pay/holiday pay/pension etc! 

    Thanks 

    Isn't £12.50 around £500 a week anyway? (depending on hours)
    Tax wise he wouldn't really be much better off, and may need to pay an accountant and will need to do self assessment returns. He would be able to offset some costs like running a van etc, but would have little security. But then current employer should be reimbursing him for certain things like business mileage /expenses anyway if he's using his own car/ tools.
    It sounds like a bad deal to go self employed for the same money, as it isn't actually any more money and there's a big loss of job security / sick pay and other rights. Even putting aside the fact that if he's only working for one employer it could be seen as disguised employment anyway, so could raise issues depending on the nature of his work.

    The savings made by the employer on employer’s NI and pension contributions are not insignificant. £750 under PAYE at the other job is the only real option here for me. 
    Yes exactly, which is why offering him virtually the same money as he's currently on look like a terrible deal for the employee and a great deal for the employer!
  • DullGreyGuy
    DullGreyGuy Posts: 10,325 Forumite
    First Post First Anniversary Name Dropper
    Lisa1978 said:
    Lisa1978 said:
    Hi, 

    A friend is earning £12.50 an hour and has been offered a job elsewhere at £750 a week (which is much more than they are earning).  They had verbally accepted the job but their current employers don't want to lose them.  The issue is they can't increase their hourly rate as others who have been there longer are on not much more.  

    Today they have offered him to go self employed instead, offering £500 a week. 

    He's finding it hard weighing everything up as he loves his current job/what he does and the other staff.  The newer job is just him and the owner and a lot of harder graft and possibly longer hours especially over the summer months. 

    Can anyone please provide calculations laying out if the self employment is worthwhile? I know he will lose PAYE benefits including sick pay/holiday pay/pension etc! 

    Thanks 

    Isn't £12.50 around £500 a week anyway? (depending on hours)
    Tax wise he wouldn't really be much better off, and may need to pay an accountant and will need to do self assessment returns. He would be able to offset some costs like running a van etc, but would have little security. But then current employer should be reimbursing him for certain things like business mileage /expenses anyway if he's using his own car/ tools.
    It sounds like a bad deal to go self employed for the same money, as it isn't actually any more money and there's a big loss of job security / sick pay and other rights. Even putting aside the fact that if he's only working for one employer it could be seen as disguised employment anyway, so could raise issues depending on the nature of his work.

    He currently does 36 hours a week.  They told him it would be an extra £125 a week.  My view is for a possible additional £500 a he's taking on a lot of other issues with lack of sick pay/rights/holiday pay etc.  I personally don't see many benefits but wanted to check other opinions.  A few weeks ago he was so ready for this other £750 a week job and can't see the woods for the trees now as everything is clouded.  I guess he's worried to take the leap now. 
    36hrs at £12.50 is £450 so £500 is only £50/week more and for that they get no holiday, no sick pay, no pension contributions, no employee benefits, no job security, no redundancy. Its a terrible offer 


  • uknick
    uknick Posts: 1,624 Forumite
    First Anniversary Name Dropper First Post
    His existing employer is paying him about £50/week more but is saving significant costs in NI, pension, redundancy etc..  Sound like a bit of a selfish employer!!

    As h
    is new role failed the employed/self employed test, I can't see what there is left to discuss.
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