Advice on a self employed salary/tax etc please
Discussion
My brother has been offered a new role as a manager of a small ish company ad they want to employ him but as a self employed person.
They are offering £48k and £1000 per month expenses and he invoices the company. They say its a good way to do it tax wise but how much tax will he have to pay/what will his take home pay be etc on those figures?
Can anyone offer any advice please, i would be very grateful
They are offering £48k and £1000 per month expenses and he invoices the company. They say its a good way to do it tax wise but how much tax will he have to pay/what will his take home pay be etc on those figures?
Can anyone offer any advice please, i would be very grateful
That doesn't sound legit to me.
I work outside IR35 but its on a fixed project, I have multiple clients and its my company that's instructed, and I can send any one to do the work and choose the days worked.
HMRC has a really useful tool to tell you what your status will be, and if you save the output it counts as evidence to HMRC if you are challenged.
I work outside IR35 but its on a fixed project, I have multiple clients and its my company that's instructed, and I can send any one to do the work and choose the days worked.
HMRC has a really useful tool to tell you what your status will be, and if you save the output it counts as evidence to HMRC if you are challenged.
coolerking72 said:
My brother has been offered a new role as a manager of a small ish company ad they want to employ him but as a self employed person.
They are offering £48k and £1000 per month expenses and he invoices the company. They say its a good way to do it tax wise but how much tax will he have to pay/what will his take home pay be etc on those figures?
Can anyone offer any advice please, i would be very grateful
His tax will be based on income of £60k less all expenses (including expenses as a result of being self employed e.g. Insurance, accountancy, paying the wife and kids for admin support, expenses of running a car, running a home office, mobile phone, laptop, etc).They are offering £48k and £1000 per month expenses and he invoices the company. They say its a good way to do it tax wise but how much tax will he have to pay/what will his take home pay be etc on those figures?
Can anyone offer any advice please, i would be very grateful
The big advantage would be if he sets himself up as a LtdCompany and then pays himself via dividend. He'd save about 20-25% because he wouldn't have to pay NI.
As others have said this sounds like it's well inside IR35 and, if they're a small company, the onus is on HIM to make sure tax is being deducted correctly. (If it was a large company the onus would be on the Employer)
thanks all so far
this is the actual wording...
MONIES : for the first year you will employed on a self employed basis at £48K pa payable to you gross without any deductions --in addition I suggest a fixed allowance of £1000 pm to cover travel and/or overnight stay expenses as necessary—you will be issuing your personal invoice each month covering your fee and your £1000 expenses ---the company will pay the cost of an accountant to prepare your tax return maximizing thus the allowable expenses you will be able to claim possibly resulting in a very minimal tax liability
this is the actual wording...
MONIES : for the first year you will employed on a self employed basis at £48K pa payable to you gross without any deductions --in addition I suggest a fixed allowance of £1000 pm to cover travel and/or overnight stay expenses as necessary—you will be issuing your personal invoice each month covering your fee and your £1000 expenses ---the company will pay the cost of an accountant to prepare your tax return maximizing thus the allowable expenses you will be able to claim possibly resulting in a very minimal tax liability
coolerking72 said:
thanks all so far
this is the actual wording...
MONIES : for the first year you will employed on a self employed basis at £48K pa payable to you gross without any deductions --in addition I suggest a fixed allowance of £1000 pm to cover travel and/or overnight stay expenses as necessary—you will be issuing your personal invoice each month covering your fee and your £1000 expenses ---the company will pay the cost of an accountant to prepare your tax return maximizing thus the allowable expenses you will be able to claim possibly resulting in a very minimal tax liability
Are they prepared to employ him as a Sole Trader rather than as a Ltd Company? Even if they I can guarantee that he will be paying more than minimal tax. In theory operating as a ST moves the IR35 goalposts a bit but he will have a number of additional expenses over those of an employee such as Public Liability & Professional Indemnity insurance & suitable business car insurance. this is the actual wording...
MONIES : for the first year you will employed on a self employed basis at £48K pa payable to you gross without any deductions --in addition I suggest a fixed allowance of £1000 pm to cover travel and/or overnight stay expenses as necessary—you will be issuing your personal invoice each month covering your fee and your £1000 expenses ---the company will pay the cost of an accountant to prepare your tax return maximizing thus the allowable expenses you will be able to claim possibly resulting in a very minimal tax liability
Even as a sole trader, HMRC take a dim view of someone working for the same company 'full time'. Also the 'employer' is taking a risk as they will be ultimately responsible for any unpaid tax etc if your mate does not pay HMRC
The company is trying to avoid the costs of employing someone, I can understand why, especially if they are a small firm, but not really the way forward.
Your mate may save some tax as he will be able to offset his legitimate expenses, but he will lose out, what about holiday pay? Pension contributions? Sick? In the end he would be better off as an employee if he stays with them.
The company is trying to avoid the costs of employing someone, I can understand why, especially if they are a small firm, but not really the way forward.
Your mate may save some tax as he will be able to offset his legitimate expenses, but he will lose out, what about holiday pay? Pension contributions? Sick? In the end he would be better off as an employee if he stays with them.
megaphone said:
Even as a sole trader, HMRC take a dim view of someone working for the same company 'full time'. Also the 'employer' is taking a risk as they will be ultimately responsible for any unpaid tax etc if your mate does not pay HMRC
The company is trying to avoid the costs of employing someone, I can understand why, especially if they are a small firm, but not really the way forward.
Your mate may save some tax as he will be able to offset his legitimate expenses, but he will lose out, what about holiday pay? Pension contributions? Sick? In the end he would be better off as an employee if he stays with them.
True, but it's less easy for HMRC to become aware of the situation (there's no box on the tax return to tick) & as you say it's the company who are initially on the hook for any tax & NI that are underpaid.The company is trying to avoid the costs of employing someone, I can understand why, especially if they are a small firm, but not really the way forward.
Your mate may save some tax as he will be able to offset his legitimate expenses, but he will lose out, what about holiday pay? Pension contributions? Sick? In the end he would be better off as an employee if he stays with them.
Mr Pointy said:
True, but it's less easy for HMRC to become aware of the situation (there's no box on the tax return to tick) & as you say it's the company who are initially on the hook for any tax & NI that are underpaid.
If it’s a small company it’s the worker who is responsible for making the assessment.ETA assuming he’s working through an intermediary and not sole trader
Jasandjules said:
There are a number of reasons why you should run away from this........ HMRC is the main one however.....
Appreciate your background, but tbh I think hmrc are the least of his worries on this one.OP, what is your brother's current role? Will he be giving up paid employment?
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