Matching/exceeding PAYE as self employed?
Discussion
Hi all,
Bit of a noob question here but please bear with me.
I'm currently in a PAYE job, the work is ok but pay isn't, and the company is doing a full American Corporate "no money for you peons" race to the bottom and everyone including me is desperately looking to leave.
However, I do know which side my bread is buttered, which is why I haven't jumped into just any old role yet.
Currently I'm only getting gross £2500, net £2100 PCM but with 13% employee pension contribution, private healthcare provision, 25 days holiday and flexible hours.
One option I've got is a complete change of career, and I've had an interview for a job in the classic car industry. The catch is that it's a commission based role, where you are self employed.
I'm told it's a retainer of £1k pcm, and my potential future colleague currently makes £45k a year comission on top of this. Obviously, the sky is the limit if one is good enough....
Now, my question is, before I jump at it.... I've never been self employed before, nor had to do self assessments etc.
Obviously I'd need to allow for pensions, holidays, sick pay and NI etc..
So can anyone give me a rough idea please of how much I'd need to make as self employed to be pay into being back in the same position regarding benefits, before I can then legitimately say I'm actually overtaking my old pay?
Thanks in advance!
Bit of a noob question here but please bear with me.
I'm currently in a PAYE job, the work is ok but pay isn't, and the company is doing a full American Corporate "no money for you peons" race to the bottom and everyone including me is desperately looking to leave.
However, I do know which side my bread is buttered, which is why I haven't jumped into just any old role yet.
Currently I'm only getting gross £2500, net £2100 PCM but with 13% employee pension contribution, private healthcare provision, 25 days holiday and flexible hours.
One option I've got is a complete change of career, and I've had an interview for a job in the classic car industry. The catch is that it's a commission based role, where you are self employed.
I'm told it's a retainer of £1k pcm, and my potential future colleague currently makes £45k a year comission on top of this. Obviously, the sky is the limit if one is good enough....
Now, my question is, before I jump at it.... I've never been self employed before, nor had to do self assessments etc.
Obviously I'd need to allow for pensions, holidays, sick pay and NI etc..
So can anyone give me a rough idea please of how much I'd need to make as self employed to be pay into being back in the same position regarding benefits, before I can then legitimately say I'm actually overtaking my old pay?
Thanks in advance!
ChemicalChaos said:
Hi all,
Bit of a noob question here but please bear with me.
I'm currently in a PAYE job, the work is ok but pay isn't, and the company is doing a full American Corporate "no money for you peons" race to the bottom and everyone including me is desperately looking to leave.
However, I do know which side my bread is buttered, which is why I haven't jumped into just any old role yet.
Currently I'm only getting gross £2500, net £2100 PCM but with 13% employee pension contribution, private healthcare provision, 25 days holiday and flexible hours.
One option I've got is a complete change of career, and I've had an interview for a job in the classic car industry. The catch is that it's a commission based role, where you are self employed.
I'm told it's a retainer of £1k pcm, and my potential future colleague currently makes £45k a year comission on top of this. Obviously, the sky is the limit if one is good enough....
Now, my question is, before I jump at it.... I've never been self employed before, nor had to do self assessments etc.
Obviously I'd need to allow for pensions, holidays, sick pay and NI etc..
So can anyone give me a rough idea please of how much I'd need to make as self employed to be pay into being back in the same position regarding benefits, before I can then legitimately say I'm actually overtaking my old pay?
Thanks in advance!
How can they claim you will be engaged on a "Self Employed" basis when you are only working for them.Bit of a noob question here but please bear with me.
I'm currently in a PAYE job, the work is ok but pay isn't, and the company is doing a full American Corporate "no money for you peons" race to the bottom and everyone including me is desperately looking to leave.
However, I do know which side my bread is buttered, which is why I haven't jumped into just any old role yet.
Currently I'm only getting gross £2500, net £2100 PCM but with 13% employee pension contribution, private healthcare provision, 25 days holiday and flexible hours.
One option I've got is a complete change of career, and I've had an interview for a job in the classic car industry. The catch is that it's a commission based role, where you are self employed.
I'm told it's a retainer of £1k pcm, and my potential future colleague currently makes £45k a year comission on top of this. Obviously, the sky is the limit if one is good enough....
Now, my question is, before I jump at it.... I've never been self employed before, nor had to do self assessments etc.
Obviously I'd need to allow for pensions, holidays, sick pay and NI etc..
So can anyone give me a rough idea please of how much I'd need to make as self employed to be pay into being back in the same position regarding benefits, before I can then legitimately say I'm actually overtaking my old pay?
Thanks in advance!
Being on Commission in itself does not make you "Self Employed". It's just another form of employment - only your wages are based on sales performance.
Countdown said:
It sounds like they're a small company. if that's the case the risk of any HMRC investigations sits with CC (rather than the "Employer") and given how underresourced HMRC are I doubt there's any significant risk. I'm not saying it's correct..............
That may be a dangerous position to take……….however the general rule is double, If your current hourly rate is 20 quid, you need 40 if you are self employed….
…even if it doesn’t sound like you would be.
ChemicalChaos said:
So can anyone give me a rough idea please of how much I'd need to make as self employed to be pay into being back in the same position regarding benefits, before I can then legitimately say I'm actually overtaking my old pay?
Thanks in advance!
Back of a fag packet - roughly £825 per week gross.Thanks in advance!
Gross salary = £30k
Ers Pension = £3.9k
Heathcare = 2.5k
Total = £36.3k
Total working weeks as self employes = 52 - 6 weeks leave (incl BH) - 2 weeks sick = 44 weeks
£36.3k pa / 44 weeks = £825 per week
This doesnt take into account you setting up a LtdCo.
Eric Mc said:
ChemicalChaos said:
Hi all,
Bit of a noob question here but please bear with me.
I'm currently in a PAYE job, the work is ok but pay isn't, and the company is doing a full American Corporate "no money for you peons" race to the bottom and everyone including me is desperately looking to leave.
However, I do know which side my bread is buttered, which is why I haven't jumped into just any old role yet.
Currently I'm only getting gross £2500, net £2100 PCM but with 13% employee pension contribution, private healthcare provision, 25 days holiday and flexible hours.
One option I've got is a complete change of career, and I've had an interview for a job in the classic car industry. The catch is that it's a commission based role, where you are self employed.
I'm told it's a retainer of £1k pcm, and my potential future colleague currently makes £45k a year comission on top of this. Obviously, the sky is the limit if one is good enough....
Now, my question is, before I jump at it.... I've never been self employed before, nor had to do self assessments etc.
Obviously I'd need to allow for pensions, holidays, sick pay and NI etc..
So can anyone give me a rough idea please of how much I'd need to make as self employed to be pay into being back in the same position regarding benefits, before I can then legitimately say I'm actually overtaking my old pay?
Thanks in advance!
How can they claim you will be engaged on a "Self Employed" basis when you are only working for them.Bit of a noob question here but please bear with me.
I'm currently in a PAYE job, the work is ok but pay isn't, and the company is doing a full American Corporate "no money for you peons" race to the bottom and everyone including me is desperately looking to leave.
However, I do know which side my bread is buttered, which is why I haven't jumped into just any old role yet.
Currently I'm only getting gross £2500, net £2100 PCM but with 13% employee pension contribution, private healthcare provision, 25 days holiday and flexible hours.
One option I've got is a complete change of career, and I've had an interview for a job in the classic car industry. The catch is that it's a commission based role, where you are self employed.
I'm told it's a retainer of £1k pcm, and my potential future colleague currently makes £45k a year comission on top of this. Obviously, the sky is the limit if one is good enough....
Now, my question is, before I jump at it.... I've never been self employed before, nor had to do self assessments etc.
Obviously I'd need to allow for pensions, holidays, sick pay and NI etc..
So can anyone give me a rough idea please of how much I'd need to make as self employed to be pay into being back in the same position regarding benefits, before I can then legitimately say I'm actually overtaking my old pay?
Thanks in advance!
Being on Commission in itself does not make you "Self Employed". It's just another form of employment - only your wages are based on sales performance.
https://www.gov.uk/guidance/check-employment-statu...
From what you have described, I would suggest that as Eric suggests, you do not qualify.
As Countdown says, the chances of being caught are slim but not by so much as to discount the possibility and if you do, the financial consequences for you could be significant.
And even if you do get away with it, you have to recognise that if something goes wrong, you have zero protection.
StevieBee said:
There is a test you can do to determine if the nature of the arrangement qualifies you for self-employed status:
https://www.gov.uk/guidance/check-employment-statu...
From what you have described, I would suggest that as Eric suggests, you do not qualify.
As Countdown says, the chances of being caught are slim but not by so much as to discount the possibility and if you do, the financial consequences for you could be significant.
And even if you do get away with it, you have to recognise that if something goes wrong, you have zero protection.
The test provided by HMRC is notoriously unreliable and people who have relied on it to claim they were self employed haven't always succeeded.https://www.gov.uk/guidance/check-employment-statu...
From what you have described, I would suggest that as Eric suggests, you do not qualify.
As Countdown says, the chances of being caught are slim but not by so much as to discount the possibility and if you do, the financial consequences for you could be significant.
And even if you do get away with it, you have to recognise that if something goes wrong, you have zero protection.
Eric Mc said:
StevieBee said:
There is a test you can do to determine if the nature of the arrangement qualifies you for self-employed status:
https://www.gov.uk/guidance/check-employment-statu...
From what you have described, I would suggest that as Eric suggests, you do not qualify.
As Countdown says, the chances of being caught are slim but not by so much as to discount the possibility and if you do, the financial consequences for you could be significant.
And even if you do get away with it, you have to recognise that if something goes wrong, you have zero protection.
The test provided by HMRC is notoriously unreliable and people who have relied on it to claim they were self employed haven't always succeeded.https://www.gov.uk/guidance/check-employment-statu...
From what you have described, I would suggest that as Eric suggests, you do not qualify.
As Countdown says, the chances of being caught are slim but not by so much as to discount the possibility and if you do, the financial consequences for you could be significant.
And even if you do get away with it, you have to recognise that if something goes wrong, you have zero protection.
If you have a strong desire to be outside IR35 and treated as self employed you might manipulate the Contract and therefore the answers you give to the CEST checklist so that it says you're outside. HMRC might think that the answers you've given aren't genuine and therefore not accept the CEST ruling.
Afternoon all,
Apologies for the delayed reply, have been quite preoccupied by a nice dose of flu....
Firstly, that's a typo in my OP - it should be EMPLOYER contribution of 13%, against my employee 3%.
Secondly - I'm not very clued up in self employment legalities, so forgive the ignorance...
During an initial interview chat the interview told me they were actually taking legal advice on the classification of self employed vs employed, later on they came back to me and said they had decided to keep things as-is.
I'm unpleasantly surprised to see that the penalties for incorrect classification are on the employee rather than the employer, I guess this should be a red flag in that case? It's not alike it's a new company, so I have to wonder how it's carried on for so long if it isn't quite right.
I don't particularly have any desire to be self employed unless there's good reason! But seeing that I'd need to be effectively making 60k(?) SE to match 32 PAYE definitely puts a different slant on things......
Apologies for the delayed reply, have been quite preoccupied by a nice dose of flu....
Firstly, that's a typo in my OP - it should be EMPLOYER contribution of 13%, against my employee 3%.
Secondly - I'm not very clued up in self employment legalities, so forgive the ignorance...
During an initial interview chat the interview told me they were actually taking legal advice on the classification of self employed vs employed, later on they came back to me and said they had decided to keep things as-is.
I'm unpleasantly surprised to see that the penalties for incorrect classification are on the employee rather than the employer, I guess this should be a red flag in that case? It's not alike it's a new company, so I have to wonder how it's carried on for so long if it isn't quite right.
I don't particularly have any desire to be self employed unless there's good reason! But seeing that I'd need to be effectively making 60k(?) SE to match 32 PAYE definitely puts a different slant on things......
Eric Mc said:
I thought that the most recent changes introduced regarding IR35 moved the responsibility for categorising the worker as outside or inside IR35 fell squarely on the shoulders of the engager (i.e. the employer).
I think it does, which is why so many large businesses went to retaining contractors under umbrella organisations, to distance themselves from liability. And so many contractors said 'stuff that' because all 'employer benefits' that were supposedly still being offered were shifted to being funded by the employee themselves through the Umbrella company. Which led in some cases to employers having to pay much more in terms of day rates to cover things (but the fee is paid to the umbrella company so the contractor might not know), or contractors getting a nasty shock on deductions from the umbrella that hit their take home hard. From your description, it does sound like the offer was to be an employee solely to this company, on a minimum salary and commission. Not unusual but certainly not 'self employed'. If it was, there would be nothing stopping you from working for them and a dozen other companies at the same time - the classic car company couldn't stop you as you would simply be a contractor, not an employee they control.
biggles330d said:
From your description, it does sound like the offer was to be an employee solely to this company, on a minimum salary and commission.
Surely the new "employer" wouldn't be stupid enough to put something in their contract stating he couldn't work for somebody else as that would undermine any claim that he's self-employed. Assume they have lawyers who've produced a carefully worded contract that would stand up to scrutiny.The bigger issue may be this sounds like a sales role but the OP doesn't sound like he has significant sales experience or even experience in the classic car industry. If that's the case it isn't a question of how much he needs to earn it's question of how much is he going to earn. Probably not much - they're not going to pay him even £1k/month for long if he doesn't start delivering sales.
So forget the self-employed issue and think of the sales issue. How confident is the OP he can deliver sales?
Hi all,
Yes, it's quite the career change for me but I live and breathe classic cars outside of work anyway hence why I stuck my name in the hat. I've got a trial day soon to see if I'm actually any good at it and whether I like it!
Yes, the job is a 9-5 M-F plus occasional weekend exhibitions for the one company (I mean, I suppose I could moonlight after hours doing something else, but one job is quite enough for me...)
The 60k figure was taken from the reply a few posts above who said as a rule of thumb I need to double a PAYE salary to match as SE with all the overheads, taxes, unexpected bits etc...
From the replies so far, I'm guessing it's not going to prove quite as attractive as the headline "12k plus 45k commission" figure makes it out to be, even without the legal grey area?
Yes, it's quite the career change for me but I live and breathe classic cars outside of work anyway hence why I stuck my name in the hat. I've got a trial day soon to see if I'm actually any good at it and whether I like it!
Yes, the job is a 9-5 M-F plus occasional weekend exhibitions for the one company (I mean, I suppose I could moonlight after hours doing something else, but one job is quite enough for me...)
The 60k figure was taken from the reply a few posts above who said as a rule of thumb I need to double a PAYE salary to match as SE with all the overheads, taxes, unexpected bits etc...
From the replies so far, I'm guessing it's not going to prove quite as attractive as the headline "12k plus 45k commission" figure makes it out to be, even without the legal grey area?
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