Had an email say the changes in legislation affecting self-employed workers which are coming into effect on 6th April 2014.
The reason why things are changing is that HMRC believe that there are 250,000 workers in the UK who are falsely self-employed and should really be employees. Until now it has been very difficult for them to challenge these workers, but now they’re changing legislation to make it easier.
In a nutshell, unless it can be proven to HMRC that the end user client does not have the right of supervision, direction or control over the worker, then your employment agency must treat all the income as employment income and tax it accordingly.
However they have a compliant solution which maintains the benefits you are currently used to. setting up individual limited companies for each of our subcontractor clients in order that you can continue to enjoy the advantages of working with Nova.
Has anybody else had anything to do with Nova - what do you think■■?
Whilst I can’t comment specifically on Nova, I had a communication from an ‘umbrella’ employment scheme recently, also pointing out HMRC were cracking down on ‘self employed’ status and some of the dodgier umbrella schemes.
To be honest, this has been coming for a long time, with agencies trying to avoid paying employers NI contributions through various ‘Mickey Mouse’ schemes.
Don’t know about NOVA but their “compliant solution” might leave you carrying the tax can, whatever they say YOU will be liable if they don’t pay your tax, even if they have deducted you said tax (and not paid it on your behalf) but in a more real life scenario, the agencies are scared stiff of being found out as being an employer and so being liable for the tax payments on top of wages previously declared as limited company or self employed status, so paid gross hmrc.gov.uk/cis/subcontracto … review.htm. ie they may have to pay tax on top of previously paid wages. They don’t want to do that. 
The ONLY reason to go LTD is for tax purposes and unless you are making over 75k a year you will lose out if you go LTD
newmercman:
The ONLY reason to go LTD is for tax purposes and unless you are making over 75k a year you will lose out if you go LTD
How will you lose out if you set up a ltd company? What way do you mean?
I’m currently with Nova, through ADR on the NFT contract in Middleton. I’m losing a lot more money through them as opposed to PAYE. This week, my gross pay was £654, less £33 to them, and after tax and NI, i cleared £499. I haven’t had the email yet, and if this is the case, I’ll consider leaving ADR.
I’m not happy being a sole trader, no holiday pay and having to top my NI up at just over £2 a week.
newmercman:
The ONLY reason to go LTD is for tax purposes and unless you are making over 75k a year you will lose out if you go LTD
You might be a Moderator on this forum and command respect but that statement is absolute bull…! On what grounds can you substantiate that claim? £75,000 ? 
i thought u could only work for so long self employed on a company,does,nt matter what u earned
newmercman:
The ONLY reason to go LTD is for tax purposes and unless you are making over 75k a year you will lose out if you go LTD
Fat chance of that if I’m getting laughed at already for “asking for £18ph”… 
turbot:
Don’t know about NOVA but their “compliant solution” might leave you carrying the tax can, whatever they say YOU will be liable if they don’t pay your tax, even if they have deducted you said tax (and not paid it on your behalf) but in a more real life scenario, the agencies are scared stiff of being found out as being an employer and so being liable for the tax payments on top of wages previously declared as limited company or self employed status, so paid gross hmrc.gov.uk/cis/subcontracto … review.htm. ie they may have to pay tax on top of previously paid wages. They don’t want to do that.
I look forward to all the crooks out there going under.
There’s too many mickey mouse outfits out there as far as I’m concerned. Just look at what you see when you put the firm under the X-Ray machine…
My agency plays it straight as far as I’m concerned. I get holiday pay that doesn’t reduce, mileage offsets, and the PAYE tax & NICs are accurate as far as I can tell.
None of this “£1ph extra for no holiday pay” or “your holiday pay is based on your average daily rate over the past 28 days, including your days off. Thus to max it, you need to do 5-6-5-6 for that month. Fail to do this, and the average falls back, and your holiday pay boils away with it”… 
Don’t pay for anything that looks like umbrella. All the pain is in what you pay. If you pay, you are being fiddled, so who’s to know what they’ve done with that tax pot they’ve taken off you already, but then not handed over to HMRC? Better on a free umbrella/payroll system and not being able to claim for pencil sharpners & rubbers for your pains. 
Torkey:
newmercman:
The ONLY reason to go LTD is for tax purposes and unless you are making over 75k a year you will lose out if you go LTD
You might be a Moderator on this forum and command respect but that statement is absolute bull…! On what grounds can you substantiate that claim? £75,000 ?
Respect? That’s funny 
I’m only going on the advice my accountants gave me when I switched from being a sole trader to a limited company.
As their role in things was to lower my tax liabilities as much as was legally possible, I listened to them, both when they advised me not to go limited and then when they told me to go limited.
One thing that did increase dramatically were accountancy fees as a Chartered Accountant is a lot more expensive. There were also a long list of things that I could no longer do with what used to be my money, but now belonged to the limited company that I owned the majority share of.
The point is, if you are going limited, do so for the right reasons, not because some yahoo at an agency tells you to so they can get away without paying you half the stuff you should be entitled to as their employee 
newmercman:
Torkey:
newmercman:
The ONLY reason to go LTD is for tax purposes and unless you are making over 75k a year you will lose out if you go LTD
You might be a Moderator on this forum and command respect but that statement is absolute bull…! On what grounds can you substantiate that claim? £75,000 ?
Respect? That’s funny
I’m only going on the advice my accountants gave me when I switched from being a sole trader to a limited company.
As their role in things was to lower my tax liabilities as much as was legally possible, I listened to them, both when they advised me not to go limited and then when they told me to go limited.
One thing that did increase dramatically were accountancy fees as a Chartered Accountant is a lot more expensive. There were also a long list of things that I could no longer do with what used to be my money, but now belonged to the limited company that I owned the majority share of.
The point is, if you are going limited, do so for the right reasons, not because some yahoo at an agency tells you to so they can get away without paying you half the stuff you should be entitled to as their employee
Sounds like a great accountant you have, tells you not to be LTD then tells you to go LTD? Instead of making ridiculous statements about needing to earn 75k or you’ll be worse off I suggest you do some research.
summerley82:
newmercman:
Torkey:
newmercman:
The ONLY reason to go LTD is for tax purposes and unless you are making over 75k a year you will lose out if you go LTD
You might be a Moderator on this forum and command respect but that statement is absolute bull…! On what grounds can you substantiate that claim? £75,000 ?
Respect? That’s funny
I’m only going on the advice my accountants gave me when I switched from being a sole trader to a limited company.
As their role in things was to lower my tax liabilities as much as was legally possible, I listened to them, both when they advised me not to go limited and then when they told me to go limited.
One thing that did increase dramatically were accountancy fees as a Chartered Accountant is a lot more expensive. There were also a long list of things that I could no longer do with what used to be my money, but now belonged to the limited company that I owned the majority share of.
The point is, if you are going limited, do so for the right reasons, not because some yahoo at an agency tells you to so they can get away without paying you half the stuff you should be entitled to as their employee
Sounds like a great accountant you have, tells you not to be LTD then tells you to go LTD? Instead of making ridiculous statements about needing to earn 75k or you’ll be worse off I suggest you do some research.
The advice was given at different times for different situations! I was advised not to when my profits were under a certain amount and then when I went over that threshold I was advised to go limited.
I got a second opinion both times and with the numbers I had, the advice I was given was the correct advice both times.
So as I have actually been in the situation and am sharing my experience about it, you cannot call BS, as it happened, once I was a sole trader and then I was the majority shareholder of a limited company. This was a result of advice from two different accountants.
So please tell us what your credentials are? You seem to know all about it.
One other thing to consider, if the taxman will let you carry on as you are now, but only if you’re limited, could it not be possible that it would still not be the right way? Except they’ll turn a blind eye as they’re getting more money from you under the tax liability you incur as a limited company 
Edit…
The 75k I mentioned was the profit I made after business expenses, but not including my wages, after those were taken out I think there was about 20k pre tax profit, I paid myself a grand a week, so 50 odd plus 20 is approx 75k.
Hello all. My personal experience of being Ltd…I am financially better off. I’m vat registered (flat rate scheme) and I have a accountant (or I like to refer to him as a magician) the things you can claim for are unreal. I earn nowhere 75k but would advise anybody thinking about going Ltd to go for it.
Same as vat you don’t have to earn over the thresold to be vat registered. You charge 20% give the nice vat man 10% and keep the other 10% for corporation tax. It’s all about offsetting expenses to reduce tax bill. Paye via employer is pants as when you over 32k you are on higher tax rate.
Hi Boycie, what line of business are you in? Being better off is good, I was also better off being limited, once I reached a certain threshold, but that doesn’t mean the same for everyone.
Also the VAT part confuses me. Unless things have changed you don’t get to keep SFA, you claim back VAT that you pay out for any business expenses, the rest that you collect has to be paid in quarterly with your return.
You can get a cheque off the VAT every quarter if you spend more VAT than you pay out, but there are only two ways to do that, one is invoicing an offshore company, the other is by running at a loss. VAT being a percentage on top of sales and receivables.
To get the best out of an accountant, you really need to be claiming for perhaps £75k gross of expenses, which you might do running 2 or 3 trucks. - Perhaps that is what is meant here.
If you are grossing £25k, then PAYE you are going to be paying around £5k in tax and insurance. Paying yourself £25k, you’ll probably pay no tax at all, if your very organised with your receipts and have one of the better accountants/payroll firms. Of your £5k of deductions though, about half of that as PAYE would be NICs which not only do you still have to pay, but also the other sides worth as well. Thus, if it costs you over £2500 a year to get your tax eliminated of a similar amount, then it’s not going to pay being self-employed in any shape or form. On Umbrella, the savings are all about what you don’t have to pay as a commission to be on payroll management… I’m quite happy with paying nowt, and am quite surprised how many other firms are still charging, and getting away with it.
If you pay £30pw “umbrella management fees” then that’s £1500 of that annual saving of £2500 gone for a start… You’re just a bum on a seat to the suits that run these things. Their core business is charging YOU rather than what they charge the end client - often a very low profit margin amount, because they’ve cut throats to get the business from other agencies. Don’t go there. 
You seem to have got where I’m coming from Winseer.
My point in all of this is that it doesn’t matter if you run one lorry, ten lorries, a thousand lorries or no lorries at all.
The only reason to go Ltd to make more (or keep more) money is for tax liability reasons and unless you are making at least 20k profit after all expenses, even wages, then being Ltd will not benefit you.
Of course there’s the other side of being Ltd, but if you don’t own any equipment you don’t have to worry about having your house taken away and if you’re driving a lorry through 1st your umbrella scheme, then an agency and finally a “logistics provider” any lawsuits will bypass you, then the agency until they get to the real money. People don’t sue unless they can get a big 5/6/7 figure chunk of change and not many agency drivers have got that kind of money in liquid assets.
Boycie2013:
when you over 32k you are on higher tax rate.
More like £41k - the first £9k4 is tax free, the next £32k is taxed at 20% and only anything more than that is at 40%.
Not many employed truck drivers will be worrying too much about 40% tax…
Going ltd has better tax breaks for you even if you only earn 20k turnover as said its about offsetting your expensies on tip don’t charge for nights out but allow put the rate in to a day or hourly rate
As a sole trader you can claim all your business expenses too! So being Ltd makes no difference.
If you are going to make a 20k profit and leave it in the bank then go Ltd as you will get a tax break…at least you will until you spend it, then you pay the tax on it anyway!
You cannot beat the taxman, you can study the tax laws and take advantage of all the allowances you can to lower your tax liabilities, but once you’ve exhausted them, you pay tax on the rest. Going Ltd will allow you to defer when you pay the tax, so if you are Ltd you can build up capital to buy equipment quicker, but if you’re only drawing money out for yourself it doesn’t matter how you do it, wages, dividends or director’s loans, you’ll pay tax on it…
