employed status
Discussion
i have been self employed/sole trader running a garage,the lease ran out in november and due to the rent hike i decided to doss for a year,ive just been asked if i want to work at a garage where a friend is going to be manager,question is do i stay self employed or go paye,spoke to my accountant and he was a bit vauge about it.
answers on a £5 note please
answers on a £5 note please
Depends,
on how much money is involved,
how much legitimate expenses you incur,
how much you 'like' doing your returns,
do you earn money elsewhere?
Do you want the 'security and benefits' associated with a Permanent position?
only you can really answer the question.
Both ways you will be PAYE, just one way you get to control the purse strings.
on how much money is involved,
how much legitimate expenses you incur,
how much you 'like' doing your returns,
do you earn money elsewhere?
Do you want the 'security and benefits' associated with a Permanent position?
only you can really answer the question.
Both ways you will be PAYE, just one way you get to control the purse strings.
JamieBeeston said:
You still have to go on PAYE with your own company.
Work for Acme PLC
PAYE
Contract for Acme PLC
technically work your YourCompany LTD
PAYE from Your Company Ltd
Yep, but that's an employee of a limited company. By 'self-employed' in this context the inference is 'sole trader'.
If you are working for someone else the normal assumption would be that you are working as an employee. Therefore, your employer would be obliged to apply the PAYE and Class 1 National Insurance regulations to the amount he pays you for the work you do for him. The Inland Revenue prefer to see people traeted as employees because they will collect more tax and NI in those circumstances.
Whether a person wishes to be treated as Self Employed rather than a straightforwrd employee is not a matter of choice. The nature of the arrangements under which you work for your "employer" will determine which set of regulations apply. If an "employer" choses to pay you as "Self Employed" and is subsequently found to have been paying you incorrectly, he could end up in serious trouble with the Inland Revenue. Believe me, it can happen and it can work out very expensive - for him.
Trying to escape PAYE by working for your own small Limited Company does not work anymore either. These types of arrangements have been made useless since the advent of IR35.
Why hasn't your accountant been able to explain these things to you?
I despair sometimes.
Whether a person wishes to be treated as Self Employed rather than a straightforwrd employee is not a matter of choice. The nature of the arrangements under which you work for your "employer" will determine which set of regulations apply. If an "employer" choses to pay you as "Self Employed" and is subsequently found to have been paying you incorrectly, he could end up in serious trouble with the Inland Revenue. Believe me, it can happen and it can work out very expensive - for him.
Trying to escape PAYE by working for your own small Limited Company does not work anymore either. These types of arrangements have been made useless since the advent of IR35.
Why hasn't your accountant been able to explain these things to you?
I despair sometimes.
Having more than one customer is an indicator that you are not an employee - but, on its own, it is not sufficient evidence. The Inland Revenue have a list of what they call "The Badges of Trade". The more of those you can exhibit, the more chance you have of proving your Self Employed status. These are:
Control - who controls the work you do, yourself or your boss?
Holidays - do you get paid holidays?
Sickness - do you get paid sick leave?
Resonsibility - who is ultimately responsible for the work you do, yourself or your "boss"?
Insurance - will you need to take out insurance for third party liability in respect of the work you do?
Tools and equipment - do you use your boss's equipment or your own?
Vehicles - do you use your own business vehicle?
VAT - are you registered for VAT and do you issue VAT invoices?
Premises - do you have your own business premises?
Advertising - do you promote your own business to the general public?
Substitution - can you take on employees of your own and can you substitute someone else if you are unable to fulfill an assignment.
Do you issue invoices for the work you do?
Are you included in an any company "schemes" which are available to his other employee's - e.g. health insurance, staff clubs, staff outings etc?
Will you have access to any company assets for your own use - vans, tools, premises which are also available to the "employees"?
Do you work for more than one individual or company?
Doing work for more than one "employer" does not in itself ensure that one of those "jobs" should not be an "employment" rather than part of your self-emplyment work.
The Inland Revenue are well aware that many individuals would PREFER to be treated as Self Employed. As I said earlier, there is not supposed to be an element of choice in deciding whether you are or not. It is the circumstances surrounding the nature of the work relationship which determine the situation.
Regarding being "better off" - the general position is that, from a pure tax and National Insurance position, the Inland Revenue get less from Self Employed individuals compared to what they collect from those who are employees and taxed under the PAYE system. However, whether that equates into more money into your hand is very much down to what type of "deal" you do with your boss.
He will certainly be keen on not taking you on as an employee as, ironically, it is he who has the biggest tax burden and administration to deal with if he takes you on as an ordinary employee. He is also the one who is taking the biggest risk if he incorrectly pays you as a self employed individual. If he is discovered to be paying you incorrectly, the Inland Revenue could force him to pay over the backlog of PAYE and Employees AND Employer's National Insurance contributions.
I hope you find the above of help.
>> Edited by Eric Mc on Saturday 22 May 08:52
Control - who controls the work you do, yourself or your boss?
Holidays - do you get paid holidays?
Sickness - do you get paid sick leave?
Resonsibility - who is ultimately responsible for the work you do, yourself or your "boss"?
Insurance - will you need to take out insurance for third party liability in respect of the work you do?
Tools and equipment - do you use your boss's equipment or your own?
Vehicles - do you use your own business vehicle?
VAT - are you registered for VAT and do you issue VAT invoices?
Premises - do you have your own business premises?
Advertising - do you promote your own business to the general public?
Substitution - can you take on employees of your own and can you substitute someone else if you are unable to fulfill an assignment.
Do you issue invoices for the work you do?
Are you included in an any company "schemes" which are available to his other employee's - e.g. health insurance, staff clubs, staff outings etc?
Will you have access to any company assets for your own use - vans, tools, premises which are also available to the "employees"?
Do you work for more than one individual or company?
Doing work for more than one "employer" does not in itself ensure that one of those "jobs" should not be an "employment" rather than part of your self-emplyment work.
The Inland Revenue are well aware that many individuals would PREFER to be treated as Self Employed. As I said earlier, there is not supposed to be an element of choice in deciding whether you are or not. It is the circumstances surrounding the nature of the work relationship which determine the situation.
Regarding being "better off" - the general position is that, from a pure tax and National Insurance position, the Inland Revenue get less from Self Employed individuals compared to what they collect from those who are employees and taxed under the PAYE system. However, whether that equates into more money into your hand is very much down to what type of "deal" you do with your boss.
He will certainly be keen on not taking you on as an employee as, ironically, it is he who has the biggest tax burden and administration to deal with if he takes you on as an ordinary employee. He is also the one who is taking the biggest risk if he incorrectly pays you as a self employed individual. If he is discovered to be paying you incorrectly, the Inland Revenue could force him to pay over the backlog of PAYE and Employees AND Employer's National Insurance contributions.
I hope you find the above of help.
>> Edited by Eric Mc on Saturday 22 May 08:52
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