i’ve been recently hired by a company, they pay the money straight in my account but they don’t wan’t to know anything about taxes, so now i wonder what should i do in order to work legally.
i’ve been doing some agency work in the past, and i’ve got some paperwork where it says i’m sole trader, i did that when i was working though NOVA, with whom i still have and account.
i’m not very much into all the possibilities of paying taxes, ltd, sole trader, paye… I’d appreciate if anyone could help me to get to know which way is better to choose, in order to pay less and earn more…
Are you registered with HMRC for self Assesment? If so you would’ve had to tell them if you were sole trader or setting up a small company. If this outfit is paying you gross only and you’re self employed then you need to be invoicing them. Prob is these days working for just one company in the UK doing something like driving kind of attracts the spectre of the IR35 stuff.
Good thing about sole trader is its sort of simple and you can claim job expenses such as fuel, map books, satnavs, phone and all the rest against tax as they are costs to you. I’ve friends who have set up small companies that contract themselves out. They claim even more expenses. This is coming under a bit of scrutiny though. Benefit of Paye is if you’re staying with said firm long term you have holiday pay and employee rights (as a contractor I’ve been laid off with a single days notice) and access by law to a company pension after a set time (albeit probably very poor).
If you’d previously set yourself up as a sole trader you should have received self-assessment tax forms each April, if you never received them then I doubt you are actually set up as a sole trader so the first thing you need to do is to tell HMRC as you must do this within a certain period ( IIRC it’s only a couple of months). Then, as FD says you need to set up an invoicing system, even if it’s only for your own records, and a method of keeping track of money coming in and going out - a simple spreadsheet will suffice. Also as FD says, if you are only working for the one company you need to be very careful as you are not truly self-employed, HMRC will consider that you & your employer are simply avoiding paying NI etc.
If you have to earn this way the safe way of doing so, and therefore more often than not, avoid being caught by IR35 and other tax avoidance rules, is to set up a limited company and then make certain you have; - more than one contract or a contract which regularly changes, - able to offer someone in your place should you be unavailable (although there is no need to actually do this in practice because no company is genuinely going to expect this). There are other terms of course.
The problem with being a sole trader these days is that the contract you have with your client is between an organisation and a person (you). This makes the revenue suspicious because you have personally provided the client with a service which should attract NI contributions and income tax. With Ltd’s this is overcome because the contract is between your business and the client and then your business pays you.
However, Ltd’s are not exempt from tax avoidance investigation. You have to be careful, and understand the rules. This is where an transport and logistics accountant specialist comes in very useful. They will charge you £400-£600 a year and will completely sort you out. If you are not willing to do a) get an accountant or b) read about and understand the perils of Ltd’s then you are going to get caught and receive a nasty tax bill and penalty.
As a sole trader
A tip is to put 25-30% of all income into a separate account as and when it arrives in your bank- and DONT TOUCH IT- (look at it as already gone and unavailable to spend) when you do your tax returns and pay your NIC it will be less than the money you have put away so you will get a bit of spending money back each year (more than enough to pay an accountant- however a decent accountant should save you more than he charges so is in effect free- without the hassle of doing the accounts yourself) and don’t have to worry about finding a lump sum to pay your dues.
If you do get HMRC investigated they look to see you have made provision to pay your dues and you can show you set aside money from each bit of income it goes a long way to helping them decide wether to burrow deeper into your finances or not.
Another tip is never throw away a receipt, save them all - again a decent accountant will be able to tell which ones can be used to mitigate your tax bill.
i’ve been recently hired by a company, they pay the money straight in my account but they don’t wan’t to know anything about taxes, so now i wonder what should i do in order to work legally.
Tell them they’re breaking the law and you should be on PAYE.
The thing is, i did recieve a letter from HRMC last april but unfortunately i lost it, well, a flatmate threw it off to the bin
So i know that im registered as sole trader
I still have an account with NOVA, maybe we could speak to them and they would be able to sort out my taxes, expenses? Anybody is using nova like that?
The other opcion would be contacting an accountatn, i think it would be the best opcion, and become LTD maybe? as i heard that agencies only work with ltd’s… is that correct??
i’ve been recently hired by a company, they pay the money straight in my account but they don’t wan’t to know anything about taxes, so now i wonder what should i do in order to work legally.
Tell them they’re breaking the law and you should be on PAYE.
Im with Conor on this one…sounds like a right iffy crew,and why the [zb] should you be running about cos they ‘dont do taxes’…
If your not doing invoices and he paying direct to your bank
If you got caught acted dumb “thought he deducted my tax”
Your employer will be liable as is illegal
The fact the co pays direct into bank accounts makes me think it’s possibly legit. It is perfectly possible to run a business and not directly employ people.
If it was the case it was automatically illegitimate people would be being chased for PAYE just because they always called the same plumber at home.
