new Job- unsure about Tax.

metso

Hi,
I've just started a new job and am unsure about the tax issues. (hopefully this is the right place to post such queries)

I'm only doing this job on a temporary basis and I'm only asked to work when i'm needed, however I may be taken on more permanently when one of the guy's who is doing the same role as myself, wife has a baby.

I have negotaited with them a daily rate of pay, and they have agreed that they would like to pay me the full amount untaxed by cheque.

I could have taken the option to be paid through their books but in the past when I have worked in this kind of industry I have always been taxed at an emergency level, which more or less takes my take home pay down less than it makes doing the job worth it in the first place.

I would like to know how to go about paying my tax, do I have to register as self employed, if so does any one know how long this takes, or how to go about it.

Does being registered as self employed prove to be difficult is for example your out of work and need to claim support?

If I do get taken on full time, I may have to buy a car, so I can ensure I can get to work, will I be able to write this off against any tax I would have to pay?

Please ask me any questions, for info, I haven't included in this post.

Thank you all for your help....

katskorner

There are many issues here and to be perfectly honest the best thing you can do is to talk to the inland revenue. You have to prove whether you are 'employed' or self-employed' and dependant upon that you will pay different levels of tax. You also need to pay regular NI contributions at £2.10 per week plus 8% of what you make as self-employed. Again this is different if you are employed.

I could detail loads more but each circumstance is different so I don't want to give you any wrong advice.

take a look at the HMCR site and the self-employment employment section for the most relevent information.

http://www.hmrc.gov.uk/startingup/selfempl.htm

That is a starter page - there is more on there and a helpline too.

Richie(UK)

In addition to K's comments, you should also be aware that the company paying you is required to exercise its judgement as to whether you should genuinely be classed as an employee or as self-employed. If they fail to do this then they will come unstuck when they get a PAYE compliance visit (and they will get one sooner or later).

ctm_2

katskorner wrote:

There are many issues here and to be perfectly honest the best thing you can do is to talk to the inland revenue. You have to prove whether you are 'employed' or self-employed' and dependant upon that you will pay different levels of tax.

That's not right. You will pay the same rates of tax wether you are employed or self employed. It's other things that are different, like the claiming of expenses, and NI.

As has already been said, speak to HMRC for advice on what is best for you.

metso

thank you for getting back to me...and your advice..

re the job....as i'm new and starting at the bottom so to speak I don't have too much leverage...

It's working within the film industry and alot of colleagues are employed on schedule d, i think that is the self employed tax code.

i've had a look at the inland revenue website and and checked out the section where basically if you can answer yes to one set of questions you can consider yourself as self employed and the other set of questions you are employed.....

my situation is that the various dept. i am working for has a set budget and can offer me a said amount for working a set amount of day's. According to the producer, the man who hired me, it is in his interest to pay me a series of one of cheques for working a set number of days.

Is it at all possible to choose the self employment tax option even if you aren't fully self employed?
Thank you once again for your help.

Elaine_Wilson

Note that the Revenue and Customs have a special department set up to deal with status enquiries (ie employed or self-employed) in the film industry.


The details are on http://www.hmrc.gov.uk/pdfs/ir56.htm

I've given that link because there are separate departments for film and television work mentioned, just in case your job overlaps into television.

katskorner

ctm wrote:

That's not right. You will pay the same rates of tax wether you are employed or self employed. It's other things that are different, like the claiming of expenses, and NI.

As has already been said, speak to HMRC for advice on what is best for you.

When I said tax, I was inclucind NI in it as that is effectively another tax! You may end up paying the same on average but the classifications are different. As a self-employed person you have to pay a weekly rate of NI as class 2 contributions that get you no more than your pension credit. Then you pay tax at normal income tax rates on any profits you make from your business. In addition you have to pay Class 4 NI on top at 8% and for this you get - that's right ABSOLUTELY ZILCH!

If you are employed you pay the NI and tax through PAYE and don't generally need to worry about the breakdown.

The employment status is important as if you are working for only one client then you are technically employed not self-employed and that means the revenue can chase you for Employers NI contributions on top of what you pay as employee - they may catch up with the company eventually but they can charge you - and this is advice direct from the Inland Revenue given at a business meeting I was part of in May this year.

I have come across many companies who want employees but don't want to set up PAYE or pay the employer contributions so therefore try to get them to be self-employed but it isn't that easy. - if you work for one employer you will end up paying more NI - just see the rules on IR35 to see how painful this can be.