Self Employed but working for a company
Discussion
Looking for a bit of advice from the employment brains!
I’ve interviewed for a job today where I would be self employed but working solely for this company. They would provide all materials/equipment required plus all leads for the job and would pay me directly every month.
I understand I would have to fill out a tax self assessment every year but would I be best off being a sole trader or setting myself up as a ltd company for the purpose of lower tax etc?
I’m new to this format of working so any advice would be appreciated.
I’ve interviewed for a job today where I would be self employed but working solely for this company. They would provide all materials/equipment required plus all leads for the job and would pay me directly every month.
I understand I would have to fill out a tax self assessment every year but would I be best off being a sole trader or setting myself up as a ltd company for the purpose of lower tax etc?
I’m new to this format of working so any advice would be appreciated.
I know it doesn't answer your question, but it sounds like disguised employment to me, unless of course you're working with this company for X month and then moving onto to work for another company.
If you're self employed, I don't believe someone can dictate that you work only for them.
I don't know why it does, but it drives me crazy that companies offer roles that are self employed when clearly they're not. Like self employed hairdressers that only work for a single salon.
As for paying lower tax, it depends how much you are being paid. My accountant recommended that I needed to be making £50k plus profits before going limited become worthwhile from a tax only perspective. Obviously being limited brings other benefits, but it also brings more expensive account too. IIRC self employed accounts where around £500 per year, limited accounts are £1500+
If you're self employed, I don't believe someone can dictate that you work only for them.
I don't know why it does, but it drives me crazy that companies offer roles that are self employed when clearly they're not. Like self employed hairdressers that only work for a single salon.
As for paying lower tax, it depends how much you are being paid. My accountant recommended that I needed to be making £50k plus profits before going limited become worthwhile from a tax only perspective. Obviously being limited brings other benefits, but it also brings more expensive account too. IIRC self employed accounts where around £500 per year, limited accounts are £1500+
Edited by TheBinarySheep on Monday 7th August 17:52
TheBinarySheep said:
I know it doesn't answer your question, but it sounds like disguised employment to me, unless of course you're working with this company for X month and then moving onto to work for another company.
If you're self employed, I don't believe someone can dictate that you work only for them.
I don't know why it does, but it drives me crazy that companies offer roles that are self employed when clearly they're not. Like self employed hairdressers that only work for a single salon.
As for paying lower tax, it depends how much you are being paid. My accountant recommended that I needed to be making £50k plus profits before going limited become worthwhile from a tax only perspective. Obviously being limited brings other benefits, but it also brings more expensive account too. IIRC self employed accounts where around £500 per year, limited accounts are £1500+
Should have been more transparent in the OP. I would be working for a car recovery company. They provide the recovery truck, training, uniform and send me the jobs to the company provided PDA every day and I get paid a percentage of the fee for each job I complete. They then pay me via BACS at the end of every month. If you're self employed, I don't believe someone can dictate that you work only for them.
I don't know why it does, but it drives me crazy that companies offer roles that are self employed when clearly they're not. Like self employed hairdressers that only work for a single salon.
As for paying lower tax, it depends how much you are being paid. My accountant recommended that I needed to be making £50k plus profits before going limited become worthwhile from a tax only perspective. Obviously being limited brings other benefits, but it also brings more expensive account too. IIRC self employed accounts where around £500 per year, limited accounts are £1500+
Edited by TheBinarySheep on Monday 7th August 17:52
Sammo123 said:
Should have been more transparent in the OP. I would be working for a car recovery company. They provide the recovery truck, training, uniform and send me the jobs to the company provided PDA every day and I get paid a percentage of the fee for each job I complete. They then pay me via BACS at the end of every month.
It would make sense if you have your own recovery truck, and you worked for three or different companies over the course of the week, but the way you're describing this is that you're self-employed, you are in essence your own boss, but your hours, jobs pay etc is decided by someone else. To me, it's a tactic used by companies to avoid paying NI contributions, holiday pay, sickness etc and they can bin you off whenever they please.Ignoring that, I'm not an accountant, but I have been self employed and limited for about 17 year, and if you go down this route, then self employed may be the way to go.
I don't agree with companies doing this, but I know it happens and don't blame people for working this way.
Basically they are screwing you. Work for them on their terms and take the pay offered. After 1 year tell them that it is disguised employment and screw them for holiday pay, pension contributions and anything you can get. As the employer they are liable for your tax and national insurance and employers national insurance which you can just pocket. Then using the contacts you built up over the year working for them setup your own company and under cut them. Screw them before they screw you.
Actual said:
Basically they are screwing you. Work for them on their terms and take the pay offered. After 1 year tell them that it is disguised employment and screw them for holiday pay, pension contributions and anything you can get. As the employer they are liable for your tax and national insurance and employers national insurance which you can just pocket. Then using the contacts you built up over the year working for them setup your own company and under cut them. Screw them before they screw you.
Sorry but that is terrible advice. If the OP isn't content with the arrangement on offer, he simply shouldn't take it.They're not screwing anyone. The arrangement is not uncommon. Many couriers operate like this and I have employed people in the past on exactly the same basis. When done well and correctly, the worker can put more in his bank account each month compared to the same role at the same rate of pay in a normal employed situation. The company has less fixed overhead so is better able to compete for business which (theoretically) makes them more agile and stable.
The law changed a few years back to afford greater protection to workers on such contracts and placed additional obligations on employers regarding holiday pay and pension contributions but there are still some downsides from the employee's perspective that have to be weighed against the benefits.
It's not for everyone but for those who it is, it can work well.
Suggesting to the OP he take the contract with the intent of stealing the company's customers for his own gain isn't the smartest idea, I'm afraid.
Edited by StevieBee on Tuesday 8th August 09:07
The legal definition of this kind of thing is worker rather than employee, I believe. It's what in layman's terms is called the gig economy.
A worker is a sort of half way house between permanent employee and freelance. You get some benefits and protections, but not the full suite.
I am self employed - I work for a dozen or so customers but have this kind of worker contract with a couple of the most regular ones. It's largely for their convenience rather than mine, although I accrue a bit of holiday pay which makes for a modest annual bonus.
I get taxed at source on my worker gigs but not on my freelance stuff. Fees adjusted so that it nets out about the same.
As stated already ca 50k is the threshold for going from sole trader to ltd co.
A worker is a sort of half way house between permanent employee and freelance. You get some benefits and protections, but not the full suite.
I am self employed - I work for a dozen or so customers but have this kind of worker contract with a couple of the most regular ones. It's largely for their convenience rather than mine, although I accrue a bit of holiday pay which makes for a modest annual bonus.
I get taxed at source on my worker gigs but not on my freelance stuff. Fees adjusted so that it nets out about the same.
As stated already ca 50k is the threshold for going from sole trader to ltd co.
dontlookdown said:
As stated already ca 50k is the threshold for going from sole trader to ltd co.
OP: Just to add, it's 50k profit and not 50k turnover.It's already been said, the only person that really benefits in this situation is the company. The whole idea of the gig economy is that you get flexibility but lose job security. In this case however, you don't appear to have any flexibility either.
If you're going to be working for them full time, why don't they just employ you? That's right, they'll have to pay NI contributions, holiday pay, sick pay, and you'll have rights as an employee.
You're giving all that away, for what benefit?
It's worthwhile sitting down working out roughly how many jobs you'll be doing per week, how much each job is and roughly what cut you'll be getting. Be realistic with the figures though. Then work out how many hours you'll be working across the week, and use that to calculate your hourly rate.
I've know people do Gigs like this in the past, and they've ended up on less than minimum wage.
There are two areas of law that are affected by a persons "engagement status" i.e. employed, self-employed etc. There are the tax and NI implications and the employment rights situation.
HMRC is dubious of a person's claimed Self Employed status if the terms and conditions of the engagement seem to imply that the "employer" is exercising the type of control over the individual that you would normally expect to apply to an employee.
For a person to satisfy true Self Employed status then they should be able to exhibit what have been described in court as "the badges of trade". In other words, they need to demonstrate that they are, in effect, in business on their own account.
As has been mentioned above, IR35 DOES NOT apply to individuals. It is a piece of legislation aimed at those who operate through their own limited company (or any other form of intermediary such as a trust or partnership).
HMRC is dubious of a person's claimed Self Employed status if the terms and conditions of the engagement seem to imply that the "employer" is exercising the type of control over the individual that you would normally expect to apply to an employee.
For a person to satisfy true Self Employed status then they should be able to exhibit what have been described in court as "the badges of trade". In other words, they need to demonstrate that they are, in effect, in business on their own account.
As has been mentioned above, IR35 DOES NOT apply to individuals. It is a piece of legislation aimed at those who operate through their own limited company (or any other form of intermediary such as a trust or partnership).
Hi everyone, I'm hijacking this thread a bit as I'm in pretty much the same situation with a couple of differences.
I work on the highway and get given jobs, PPE, tools, materials, etc. I get payslips every week were a set amount of tax is sent to HMRC. However, to the business I am self employed as a CIS contractor. This gets my wick a bit as the company have all the benefits and I have literally zero.
All the IR35 stuff online only seems to apply to LTD companies.
ETA - I didn't see Eric MC's post above mine.
I work on the highway and get given jobs, PPE, tools, materials, etc. I get payslips every week were a set amount of tax is sent to HMRC. However, to the business I am self employed as a CIS contractor. This gets my wick a bit as the company have all the benefits and I have literally zero.
All the IR35 stuff online only seems to apply to LTD companies.
ETA - I didn't see Eric MC's post above mine.
Edited by BigGingerBob on Tuesday 8th August 19:44
BigGingerBob said:
Hi everyone, I'm hijacking this thread a bit as I'm in pretty much the same situation with a couple of differences.
I work on the highway and get given jobs, PPE, tools, materials, etc. I get payslips every week were a set amount of tax is sent to HMRC. However, to the business I am self employed as a CIS contractor. This gets my wick a bit as the company have all the benefits and I have literally zero.
All the IR35 stuff online only seems to apply to LTD companies.
ETA - I didn't see Eric MC's post above mine.
You will fall under the Construction Industry Scheme (CIS) a government thing which is basically making sure that the tax is paid Link a bit like IR35 it puts more of the emphasis and responsibility onto the hiring company.I work on the highway and get given jobs, PPE, tools, materials, etc. I get payslips every week were a set amount of tax is sent to HMRC. However, to the business I am self employed as a CIS contractor. This gets my wick a bit as the company have all the benefits and I have literally zero.
All the IR35 stuff online only seems to apply to LTD companies.
ETA - I didn't see Eric MC's post above mine.
Edited by BigGingerBob on Tuesday 8th August 19:44
BigGingerBob said:
Hi everyone, I'm hijacking this thread a bit as I'm in pretty much the same situation with a couple of differences.
I work on the highway and get given jobs, PPE, tools, materials, etc. I get payslips every week were a set amount of tax is sent to HMRC. However, to the business I am self employed as a CIS contractor. This gets my wick a bit as the company have all the benefits and I have literally zero.
All the IR35 stuff online only seems to apply to LTD companies.
ETA - I didn't see Eric MC's post above mine.
And I presume that you are aware that you need to prepare a set of self employed sole trader accounts and you will need to submit a Self Assessment tax return?I work on the highway and get given jobs, PPE, tools, materials, etc. I get payslips every week were a set amount of tax is sent to HMRC. However, to the business I am self employed as a CIS contractor. This gets my wick a bit as the company have all the benefits and I have literally zero.
All the IR35 stuff online only seems to apply to LTD companies.
ETA - I didn't see Eric MC's post above mine.
Edited by BigGingerBob on Tuesday 8th August 19:44
Eric Mc said:
BigGingerBob said:
Hi everyone, I'm hijacking this thread a bit as I'm in pretty much the same situation with a couple of differences.
I work on the highway and get given jobs, PPE, tools, materials, etc. I get payslips every week were a set amount of tax is sent to HMRC. However, to the business I am self employed as a CIS contractor. This gets my wick a bit as the company have all the benefits and I have literally zero.
All the IR35 stuff online only seems to apply to LTD companies.
ETA - I didn't see Eric MC's post above mine.
And I presume that you are aware that you need to prepare a set of self employed sole trader accounts and you will need to submit a Self Assessment tax return?I work on the highway and get given jobs, PPE, tools, materials, etc. I get payslips every week were a set amount of tax is sent to HMRC. However, to the business I am self employed as a CIS contractor. This gets my wick a bit as the company have all the benefits and I have literally zero.
All the IR35 stuff online only seems to apply to LTD companies.
ETA - I didn't see Eric MC's post above mine.
Edited by BigGingerBob on Tuesday 8th August 19:44
Sammo123 said:
Should have been more transparent in the OP. I would be working for a car recovery company. They provide the recovery truck, training, uniform and send me the jobs to the company provided PDA every day and I get paid a percentage of the fee for each job I complete. They then pay me via BACS at the end of every month.
So, you will be an employee then.......... They are just looking to avoid paying NI etc..
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