Self Employed, Not Earning As Much As I Thought... E.g. no pension/holiday/sick contributions

xelayerfdog · 2 October 2019 at 5:47PM

I've been trundling on very nicely making a decent living for nearly 5 years as a self employed person on the higher rate of tax, however it's really started to dawn on me how much one loses out on employer benefits, namely pension contributions and paid holiday/sick leave.

Has anyone done the maths and found they're better off employed, even if they take a £10k+ pay cut? I'm trying to work out what my pay really equates to in the conventional working world, if I was to go back to having a dreaded boss...! :eek:

Takeaway_Addict · 2 October 2019 at 5:58PM

Surely you're better to look at increasing your revenue and paying for those things yourself?

MovingForwards · 2 October 2019 at 6:46PM

28 days holiday, incl bank holidays = save 28 days of your pay for your holiday entitlement to yourself.

Not all companies have sick pay above statutory sick pay. SSP is currently £92.05 per week for upto 28 weeks, first 3 days are not covered. = Take out an insurance policy to cover yourself, although I would hope you already do.

Minimum pension is 8% between employee and employer, depending on the company it's about 3x annual salary death in service benefit. = Have you not already got a pension to reduce your tax liability?

If you want to compare like with like then it's down to what line of work you will do working for someone else, how high up the ranks you think you will enter. Only then can other perks be looked at eg health benefit (Bupa etc), company car / allowance both attract tax and deductions from wages for the perks.

But you have an idea as to what is out there and could always look at a few businesses that have roles you would enter, see what perks they offer, then research as to what benefit it is compared to self-employment.

Brynsam · 2 October 2019 at 9:17PM

How did you arrive at a price for your services if you haven't done the maths already? And why are you self employed rather than working via a limited company, which does (still) bring some advantages, even with the dreaded IR35 lurking around.

For a simple comparison, divide last year's net profit by 52. Multiply by 45 (to allow for statutory holiday + some paid sick leave). Reduce your year's net profit by 3% (minimum employer contribution to a pension scheme under auto enrolment regulations). How does that figure equate to what you'd be worth in today's market, albeit with no allowance for perks such as live cover, health insurance, bonuses etc.

Then ponder this: how much is it worth to be your own boss?

ACG · 2 October 2019 at 9:35PM

You have to weigh up everything.

I could earn more being employed, but I get to spend time with my little girl in the morning, having breakfast watching TV, a little play etc all relaxed no rushing out the door.

I picked her up at 3pm today and we went to the park for a bit.

If I want to go to the golf course or gym tomorrow, once my calls are out of the way in the morning I can do.

You also have to look at money saved. When I worked in town, it would cost me about £100+ a month in travel and I would usually just buy lunch from a cafe - so there is a couple of grand a year. Working for myself I sometimes work from home so I save on both of those.

Self Employed, Not Earning As Much As I Thought... E.g. no pension/holiday/sick contributions

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