Only ever worked for companies, never an agency both before driving and since I’ve been driving. Browsing through jobs and I see what appears on the face of it decent pay, but it I see things like “this is the limited company rate” or this is “PAYE”. In simple terms what does this mean and how does it affect the advertised rate of pay in reality? Ie how can I work out what my take home would be?
PAYE is pay as you earn and that should mean the agency will stop tax and NI in the usual way, you’re employed by the agency.
Limited company means you start your own limited company and work through the agency as self employed, you are responsible for paying your own tax and NI.
Agencies will often want to pay you through an umbrella company, this means they will not be directly employing you and will not be responsible for stopping tax and NI out of your wages.
(You will have to pay the umbrella company anything from £15 to £20 per week out of your earnings)
Most agencies will pay £1 per hour more for limited company drivers and drivers who agree to be paid through an umbrella company, so you get £1 per hour more but you lose holiday pay ec’t.
Be aware that HMRC does not recognise limited company drivers who work through an agency or drivers who are paid through umbrella companies as self employed for tax purposes.
So to out that in real terms, one job I’ve seen this morning stated £11 per hour which is limited company rate. 12 hour shifts Monday to Friday on nights. What would you expected your take home to be on 60 hours at £11ph but as a limited company driver?
Also does it cost you to set yourself up as a Ltd company driver or is it just a paper/form filling out exercise?
If you’re limited company you get paid exactly what the advert says, you’ll be responsible for paying your own tax and insurance so £11 per hour for 60 hours would be £660 pounds that would be paid into your bank account, however you will be responsible for paying your own tax and NI and most likely will need to pay an accountant to do your books.
I’ll leave people who have done it to tell you more about the pros and cons of working for an agency through your own limited company, but you shouldn’t even consider it until you’ve learned about it and understand what’s involved.
Rowley010:
So to out that in real terms, one job I’ve seen this morning stated £11 per hour which is limited company rate. 12 hour shifts Monday to Friday on nights. What would you expected your take home to be on 60 hours at £11ph but as a limited company driver?Also does it cost you to set yourself up as a Ltd company driver or is it just a paper/form filling out exercise?
You can set yourself up for about £40 but you’re going to have ongoing accounting costs of anywhere from £250 if you do pretty much everything yourself (invoicing, book-keeping, paying PAYE to HMRC etc) and just get your accounts certified to well over £1000 a year if you have them do it all for you.
You have no rights as an employee, not even the right to actually even be paid so one day the agency can just decide they’re not going to pay you and you’d have to take them to court to get your money.
So what’s the advantage? No rights, sorting out your accounting etc, no guaranteed work? £11 per hour doesn’t seem to make all that risk worth while to me, unless I’m missing something?
Rowley010:
So what’s the advantage? No rights, sorting out your accounting etc, no guaranteed work? £11 per hour doesn’t seem to make all that risk worth while to me, unless I’m missing something?
The idea was to fiddle the TAX. Claim as many expenses as possible and pay yourself the minimum amount but take a dividend from the company.
You also have to pay your own holiday pay, sick pay and pension. Or not…
PAYE all the way for me
Wouldnt touch the limited company etc through an agency
Tommy7437:
PAYE all the way for meWouldnt touch the limited company etc through an agency
Yeah but you have a few agency’s that do that via an umbrella set up …
Unless it’s raining, umbrella’s are losing their appeal.
As of April this year, you can no longer claim tax exemption for travelling back and to from work.(45p per mile which was enough usually to offset/negate the £25 or so per week charge for being paid your wages).
It’s entirely down to individual circumstances. If you can manage your finances well then it’s Limited, if not then stick with PAYE, “it’s rough but regular”.
Honestly !