Well well well…for those of you who have (or will soon) suffered the same fate as me from your agency, this is my short story…and some questions.
On Friday me and a bunch of other drivers from my agency had a meeting and we were told that we must all become self employed in the near future or the agency are going to stop using us. The reason being that the big orange supermarket has placed a company between themselves and the agency I use (to avoid the AWR), which in turn means that the agency now has less money coming in and now, for them it’s just not worth paying our Wages, Tax and NI too. In this meeting, we were told that a separate company would now pay our wages and for a fee of 8% of our total earnings, an accountancy company would help us with our tax return and so on…note the word ‘help’, not ‘do our tax return’, but only help with it.
Using agencies used to be so simple…it went like this:
- Company wants workers
- Agency supplies workers
- Company pays agency
- Agency pays workers
But heres how it will now work…
- Company wants workers
- Agency supplies workers
- Company pays De Poel
- De Poel pay agency
- Agency pays Contracting firm
- Contracting firm pay workers
- Workers pay 8% fee of total earnings to accountancy firm.
This was the sales pitch “At present, you pay 32% of everything you earn (20% Tax, 12% NI) to the tax man…but with this new set up you will only pay 8% of what you earn, meaning you are guaranteed to now take home 92% of what you earn, and we will minimise your tax bill by allowing you to claim for expenses to be offset against your tax bill, and in most cases, may actually result in a payment from the taxman back to you”
Now this sounds great doesn’t it?..but me being me, and I’m sure most of you reading this will agree, sounds too good to be true. So I thought I’d do some maths. Now lets say I make £700pw for 48 weeks and give 8% to this accountancy firm, that means I’d have paid them £2688 in my first year…But remember, they don’t fill out my tax return for me or anything like that, for an extra £100 they’ll fill out my tax return…so what on earth do they actually do for that kind of cash per year?
Now to set up as self employed you fill out one little form and you get your own special tax code, then once a year you fill out a tax return and so far the cost to you?..nothing!
So it looks as though I will have to go self employed (quietly for now), but I’m unsure as to what expenses I can legally claim, with minimal effort. I know I can claim mileage, but seeing as I only live a few miles away from the depot, that won’t provide much money. I know I can also claim some limited money back on my house as I’d have to have an “office”…but since I’m being made homeless half way through december I can’t do that. Am I also correct In thinking that if I source my own accountant, I can effectively get him for free as I can actually claim that as a business expense too?
I also keep reading about meal expenses…“work 10 hours or more a day and you can claim £10 without needing to have a receipt” and so on so forth…So what’s the deal then? What can and what can’t I claim for? Also…should I bother Ltd. or just stay as Sole Trader?
Now whilst I appreciate people giving me advice, I think for me and the benefit of other people who will be facing this situation, please dont flood this thread with “I think you can claim this and that, but not sure”…It would be better if you could back things up with some sort of official proof, such as links to the relevant text on HMRC website and such. I did try the search function, but the amount of crap that threw back at me was staggering!
P.S. - If you know/use an accountant who’s brilliant, does bring your tax bill to almost zero and only costs £500 or less, then please feel free to forward on their details to me via a PM 