PAYE vs self employed

[Mr Fowler]

Hi. I'll start off by apologising in real British fashion as I imagine there's already at least one of these threads.

 

Im currently working for a commercial company on the books and have been for 6 months. I've just been offered essentially 5-6 days a week with a domestic firm for more money on a self employed basis. It's a busy domestic firm that seems to be doing very well. Most likely shorter days and 10 minutes closer to home.

 

I've considered the obvious such as the money minus paid annual leave, buying more gear (although currently using my own stuff at work, but lots needs replacing!), accident insurance, having to sort out my own tax etc.

 

I need advice on what other things I should consider to help me make my decision?!

 

Its worth noting I worked as a subby before when I lived in London and wasn't ever short of work, but now I'm in South East of England and know less people. I'm 28 and a distinctly average climber, good attitude and work ethic, never late, never sick, good with clients.

 

I am concerned about work dropping off in January leaving me short for a month if I went self employed.

 

Any advice appreciated!

Edited August 16, 2014 by Mr Fowler

[openspaceman]

I've just been offered essentially 5-6 days a week with a domestic firm for more money on a self employed basis. It's a busy domestic firm that seems to be doing very well. Most likely shorter days and 10 minutes closer to home.

 

On the surface it looks like you will not be self employed, just paid by an employer that wishes to avoid dealing with PAYE and NIC.

 

To be truly self employed means finding your own work, amongst many firms or private clients, planning your work and taking responsibility for it. Not least amongst the considerations the tax man will consider is whether you can get someone else to do some of the work for you.

 

Aside from that aspect, if you are rigorous with your tax matters you need to gross at least 25% more per day if self employed, after legitimate costs for tools and consumables, than doing the same work on PAYE. I never did .

[hicksj]

Hello,

 

Slightly different for me as I'm still a novice climber, I started out four months back as a subbie working for five different firms. I got most of my bookings through one company and he took me on full time recently.

 

Whilst self employed was nice and I earned a bit more on day rate, it does have its draw backs:

 

You are self employed for a reason - no kit, sick pay or holiday pay. The worst bit is they can drop you at a moments notice! Winter time everyone dips in work load, knowing that over Christmas my bank balance is guaranteed is great peace of mind.

 

I also spent £1300 on climbing kit, ppe and a Stihl saw. Then another £300 annually for my public liability (always have your own insurance, its not worth the risk, hoping your on your someone else's!)

 

If I'm honest being your own boss is great, the extra day rate is great. But the drawbacks out weigh the those two factors for me.

 

I have to also admit I am really lucky, I work for a great company and I get the time invested in me to become a stronger climber.

 

Go with your gut instinct, just be careful.

 

Also finance is a bastard for self employed subbies. Loans, credit cards and mortages all want 3 years accounts showing strong profit = ball ache!

 

PS. As a subbie, they don't really care about your climbing improving etc, they want the job done quickly to make profit and to pay you. So if you want to develop your climbing = a higher day rate in the future. It will take a lot longer and you become a work mule (not always) instead of a valued team member.

Edited August 16, 2014 by hicksj
forgot to mention

[countrryboy]

Its swings and roundabouts really.

 

I've been self employed all my life but sometims think i would be better of on the books getting hol pay etc.

 

Recently (well for quite a few years now) the HMRC have been clamping down on people working for the same employer SE. They argue should be employed.

Think ur only meant to get 70% work from 1 boss and also meant to be able to lose money on a job, ie piece work. So if ur being paid a day/hour rate (which most are) u can't lose money if a job goes bad

 

I'm sure someoe with a bit better grasp of tax will correct wot i have wrote but generally right

[mikedrums69]

Started SE. Currently on the books but starting to climb for other people/own jobs again on weekends as I missed the responsibility. It's a case of swings and roundabouts I'm afraid! Were do you see yourself in years to come? That's the question I asked myself. The answers different for everybody.

[woodyguy]

If you work for somebody 5-6 days per week every week then you are not self employed. End of story, you have no choice.

[NFG]

Hi

 

There are lots to consider, but first I would ask the potential new employer what notice you will have, if for example you have a three month or 30 days rolling contract then that gives some security in knowing you have work.

 

If they havnt offered something like that then explain thats its a big decision & ask for it as a condition of joining (if you're going to go with them)

 

N

[Inoff the Red]

For what it's worth some of the HMRC guidelines on what constitutes self employment can be found here:-

 

https://www.gov.uk/working-for-yourself/what-counts-as-self-employed

 

It is an area that HMRC is looking at quite closely, particularly in the construction industry where there are a lot of labour only subbies.

 

 

As for the choice between employed and self employed it depends on your perception of risk. As an employee you have the benefits of a regular salary, holiday pay etc but the downside that you do not control your own destiny.

 

As a self employed you do not have the comfort blanket of a contract of employment but you do control your own destiny and have the opportunity to build something of value that could see you through to retirement and beyond.

[bella wood]

Forestry company's are now being made to go PAYE ,, one company i do hand cutting for (felling outsider's, brashing , driving there winch tractor ) is having to put everyone on PAYE including me doing 2 or 3 day's a week ,, im self employed but when working for them i will be tax'ed at source as they call it ,, gone from being paid weekly to monthly and will have tax taken off after £850 per month, but when self assesment tax return is done i maybe able to claim money back from the hmrc

Im not sure how it will work out as this is the first month ,

Has anybody else had to do similar ??

[Inoff the Red]

Forestry company's are now being made to go PAYE ,, one company i do hand cutting for (felling outsider's, brashing , driving there winch tractor ) is having to put everyone on PAYE including me doing 2 or 3 day's a week ,, im self employed but when working for them i will be tax'ed at source as they call it ,, gone from being paid weekly to monthly and will have tax taken off after £850 per month, but when self assesment tax return is done i maybe able to claim money back from the hmrc

Im not sure how it will work out as this is the first month ,

Has anybody else had to do similar ??

 

The costs you can claim against your employment income will depend on what your contract of employment says, e.g. what equipment you have to provide etc. The company is obliged to issue a written statement of employment particulars within two months of starting.

 

I am intrigued as to why your employer has gone down this route because it can be expensive for them with employers NI, holiday pay, sick pay (possibly), pension contributions and the latent liability in the event of redundancies.

 

I have had some battles with HMRC when they have tried to argue that subbies were really employees but what becomes clear during the "discussions" is that (imho) HMRC run the argument to see how robust the defence is. If a company caves in, HMRC will rub their hands and think of extra employers NIC they will collect. When faced with a rigorous defence demonstrating that the indicators of self employment set out in the HMRC's own documentation (see my earlier post above) are being met, they normally accept defeat and move on.