the maoster:
I’m not going to defend £8 an hour but I’m interested as to how you think a profit can’t be made at £8 an hour Phil?
National Minimum Wage is £6.31 an hour.
Holiday pay is 10.7%
Employers NI is 13.8% on all pay over £148 a week.
So assume you do 60hrs a week paying yourself national minimum wage, no nights out.
You bill from your Ltd Company to your “employer” : £480
It costs you:
£378.60 in wages at NMW
£31.82 Employers NI
An additional £40.70 in holiday pay which is put aside.
So you now have £410.42 in tax deductible costs which, if you actually include holiday pay is £452.12.
You also claim £3 a week for using your home as an office. You pay someone to do your PAYE(RTI) and books which is £15 a week so now you have £468.12 in tax deductible costs.
So on paper you’re now at a profit of £11.88 or £617.76 a year
But you then would no doubt be claiming mileage as an expense to reduce your tax. So say you travel 100 miles a week to work. That is another £45 a week or £2088 a year in mileage claims at HMRC rates assuming you have the legally required 5.6 weeks holiday.
So now you’re operating at a loss of £1470.24
But you also have a company mobile phone. So that’s another £360 a year so you’re now at a loss of £1830.24
But then your “employer” expects you to cover your holidays at your expense. So that costs you another £2640 if you can find a mate to work for £8/hr or over £4k if you have to get an agency driver in.
So you’re now at a loss of between £4470 to over £6000.
Please note there is no public liability insurance factored in and the costs of setting up the Ltd Company have also not been factored in.
Doing it this way even with the £22 a week fee i’ll be 18% better off a week in my bank.
Doesn’t matter a toss what you put in your bank. What matters is the figure which is reported in your annual accounts and lodged with Companies House. If that figure shows a loss every year you’re going to be in trouble.
Self employed for £8 is mug money. To give you an idea of how much of a fool you’re being taken for, as a self employed driver I was charging and getting £12 an hour basic in East Yorkshire EIGHT YEARS AGO.
IF YOU ARE WORKING SELF EMPLOYED FOR £8/HR PAYING £22 A WEEK ADMIN CHARGE YOU ARE EFFECTIVELY WORKING FOR 18p/hr LESS THAN NATIONAL MINIMUM WAGE
Would you take a job paying £6.13/hr because that is exactly what you’re doing.