Free lancer vs PAYE at equivalent cost to business? 

[benedmonds]

Rather than trash the employment thread I thought I would start a new one.  Beddows are seeking a member of staff and offering what looks to me like a very good day rate.

220 days at £180 a day equals £39,600 a year.  Which is going to be more than many small company owners make, and definitely more than most make in the first few years trading.. All for allot less stress.. 

 

How much is the equivalent cost to a business for PAYE. My estimates of financial cost to the business of an equivalent full time position after NIC, Pension, training, ppe etc etc. would be around £30,000 

 

But how much is having permanent employment, sick leave, guaranteed work worth?

Not to mention possibilities of progressing in the business..

 

Edited January 25, 2019 by benedmonds

[Mick Dempsey]

Good idea to separate it.

 

Someone made a good point on that thread, the guy who was capable of all the things asked for in the advertisement would surely be running his own gig.

 

I have never bought the ‘stress of running your own business’ mantra.

 

Tree work or more especially domestic tree work is an easy small business model, you’re usually paid up by the end of the day, no need to provide qualifications, no regulatory body checking your work, no 10 year insurance cover.

 

Very little needed to get started, no need to front up for materials, no stage payments, and for a good few year, no VAT to fret about.

 

 

Edited January 25, 2019 by Mick Dempsey

[Inoff the Red]

6 hours ago, benedmonds said:

Rather than trash the employment thread I thought I would start a new one.  Beddows are seeking a member of staff and offering what looks to me like a very good day rate.

220 days at £180 a day equals £39,600 a year.  Which is going to be more than many small company owners make, and definitely more than most make in the first few years trading.. All for allot less stress.. 

 

How much is the equivalent cost to a business for PAYE. My estimates of financial cost to the business of an equivalent full time position after NIC, Pension, training, ppe etc etc. would be around £30,000 

 

But how much is having permanent employment, sick leave, guaranteed work worth?

Not to mention possibilities of progressing in the business..

 

 

I'm not sure what "paye at equivalent cost to business" means.

 

PAYE is not a cost to the business it is a deduction from an employees gross earnings which is then paid over to HMRC so the cost to the business is nil.

 

 

[WesD]

Surely they are of equal value/cost to your business?? 

 

 

[AHPP]

 
I'm not sure what "paye at equivalent cost to business" means.
 
PAYE is not a cost to the business it is a deduction from an employees gross earnings which is then paid over to HMRC so the cost to the business is nil.
 
 

Employer NI/pension contributions?

[Mark Bolam]

I read it that to a climber £30k PAYE with all the trimmings is equivalent to taking nearly £40k self employed.

[donnk]

 

Quote

 

 

Takehome would be around £27k. Lets not beat about the bush this isn't going to make anyone rich. But its not at all bad either for manual work. You would want holiday pay as well as your going to be an employee not a subbie as far as tax man is concerned IR35.

 

employer would stand around 4.5k of NIC

 

Now compare that to running your on ltd co and having the same amount of profit to take out the business.

 

on £39k profit

 

Your PAYE salary will be your tax code/allowance of £12k you will pay £411 NIC  and £2k dividend tax taking home £37.5k

 

Now pay £7.4k of corp tax and you are clear about £3k for all the hassle of running a 1 man band business and not forgetting no holiday pay.

 

Edited January 26, 2019 by donnk

[tree-fancier123]

1 hour ago, donnk said:

Now pay £7.4k of corp tax and you are clear about £3k for all the hassle of running a 1 man band business and not forgetting no holiday pay.

 

the only thing is, from his advert, he wants a good man, able to run teams and do every aspect of arb, even to know a bit of background plant science. Now, there are I'm sure many one man banders with a few occiasional hired hands to call on who can clear 35 - 40k profit doing trees, hedging , fencing, but wouldn't be any good at being a foreman. It's easier to run a small outfit for themselves, than a bigger one for someone else, where a greater technical knowledge/ability and leadership skills are required. So saying 'is it worth trying to get your own work when you can make as much working on the books for someone else?' doesn't consider the fact that a lot of one man band chaps can make that money, but would struggle to do what the advertiser is asking 

[Jamie Jones]

On 26/01/2019 at 00:25, Inoff the Red said:

 

I'm not sure what "paye at equivalent cost to business" means.

 

PAYE is not a cost to the business it is a deduction from an employees gross earnings which is then paid over to HMRC so the cost to the business is nil.

 

 

You still have Employers NI, and Pension Contributions plus other misc exes

 

[Jamie Jones]

One thing that you are forgetting in all this is that the rules changed a good while ago.

Lets say I am self employed and I have a mixed bunch of customers then all is good. Things run smoothly.

The problem comes when say all your work drifts in to, or a clear decision is taken to work for a single customer full time. The taxman can now deem it that as you are in fact working for a single customer on a full time basis you in fact staff. The taxman can now go after your main customer for tax avoidance as he is not paying employers NI taxes.

I am not sure at what percentage of your work for one customer is level at which this element affects your business in the tax mans view.

But a few years ago my accountant stated that I was getting close to the point where I would have to approach the customer for a full time position (Which would mean that they would drop me and use other). If I crossed the threshold your accountant is duty bound to inform the tax man of your situation.

The only way that I can see you can get around this is by being a limited company. But If I am correct this can still cause problems. In the Building / Construction Industry contractors on major construction site are often taxed at source.