SE (Ltd) Vs PAYE

UK PROFESSIONAL DRIVERS FORUMS THE UK PROFESSIONAL DRIVERS FORUM (INTERACTIVE)
1

Hey again all.

Ok so I have seen numerous threads on here regarding the whole SE thingy, but they all seem slightly outdated. So I am going to push my look and pick the brains of those in the know. PS please forgive the questions if they seem retarded I just like getting a second opinion.

  1. Is it worth becoming SE and contracting to an agency for a measly £1 extra p/h? (Think I might of answered that myself)
  2. I have seen threads on the requirement on having a “client base”, this leads me to believe that I need to be in it for a few years before moving to SE, is this the case?
  3. If Q2 is a nicety and not a necessity any websites for SE Drivers, other than Trovit?

Any other (literally anything) in date info would also be awesome Pros, Cons etc etc.

Once again thank you for your time, and all the best.

2

This thread will run a while methinks. What we have here is two very opposing camps to this whole s/e versus paye malarky. Both camps will give you very persuasive arguments backed up by countless facts and figures as to why you shouldn’t entertain the other method.

My personal take is that I’ve done both over the years and am more than happy as a Ltd Co. However, that is my take on my position! What suits me may not suit another. So my advice would be try it, if you don’t like it then drop it. In a nutshell that’s all there is to it.

Good luck. :wink:

3

the maoster:
This thread will run a while methinks. What we have here is two very opposing camps to this whole s/e versus paye malarky. Both camps will give you very persuasive arguments backed up by countless facts and figures as to why you shouldn’t entertain the other method.

My personal take is that I’ve done both over the years and am more than happy as a Ltd Co. However, that is my take on my position! What suits me may not suit another. So my advice would be try it, if you don’t like it then drop it. In a nutshell that’s all there is to it.

Good luck. :wink:

This ^.

As a general rule, if you need to ask questions about SE/Ltd/going it alone, it isn’t for you and you’re best staying on PAYE. Going it alone is for business minded individuals not people who look at the extra £1 offered by the agencies and want some of that but aren’t interested in becoming SE/ltd to get it, hence these weekly threads. If you’re contracting to agencies then you tell them the rates, not the other way round. Asking if there are “sites like Trovit” for SE drivers tells me this really isn’t for you and you should stay PAYE. :bulb:

4

For an extra £1/hr, no. Most of what you claim Ltd you can claim on PAYE anyway as an agency worker. One thing often overlooked in the quest for diddling the taxman as S/E is when you want to borrow money or get a mortgage. Lenders will only be interested in the net profit as a sole trader or what is on your P60 as Ltd. They won’t care that you earned double that but put half your wages through as expenses to lower your tax bill. They’ll just be interested in what the net amount you got paid not including expenses is as expenses are not seen as steady income.

5

Left hand down!:

the maoster:
This thread will run a while methinks. What we have here is two very opposing camps to this whole s/e versus paye malarky. Both camps will give you very persuasive arguments backed up by countless facts and figures as to why you shouldn’t entertain the other method.

My personal take is that I’ve done both over the years and am more than happy as a Ltd Co. However, that is my take on my position! What suits me may not suit another. So my advice would be try it, if you don’t like it then drop it. In a nutshell that’s all there is to it.

Good luck. :wink:

This ^.

As a general rule, if you need to ask questions about SE/Ltd/going it alone, it isn’t for you and you’re best staying on PAYE. Going it alone is for business minded individuals not people who look at the extra £1 offered by the agencies and want some of that but aren’t interested in becoming SE/ltd to get it, hence these weekly threads. If you’re contracting to agencies then you tell them the rates, not the other way round. Asking if there are “sites like Trovit” for SE drivers tells me this really isn’t for you and you should stay PAYE. :bulb:

Ok, well thank you for your constructive feed back.

However I don’t think I was “looking” at the £1 extra offered, It was merely an observation on what I have seen whilst browsing the wonderful world of the internet. And as for not being business minded, well that is true hence the posting on this forum to try and avoid and learn from past mistakes/errors in judgement and gauge the general attitude towards self employment and PAYE. With me being the uneducated type with little business acumen I will try and add more information to any future thread, maybe write it in crayon and scan it would be easier for me?

6

A little off topic but is it true if your LTD company if you go direct to a company you need public liability ins where as if you go through an agent you don’t ?

7

As I understood it, as a limited company you need employers liability insurance as you are an employee and it I mandatory. Public liability is not mandatory but is strongly advised and get a minimum £2million cover

8

scanny77:
As I understood it, as a limited company you need employers liability insurance as you are an employee and it I mandatory. Public liability is not mandatory but is strongly advised and get a minimum £2million cover

That’s not necessarily correct and there have been several test cases where this has been proven to the contrary.

So, it cannot always be assumed that you are an employee of your company. If you are a sole shareholder or have a controlling interest in the company, or you are a sole director or the only other director has no voting rights; you cannot be dismissed, are not answerable to anyone and no-one controls your actions then, it is likely you are not an employee of your limited company.

9

bjd:
A little off topic but is it true if your LTD company if you go direct to a company you need public liability ins where as if you go through an agent you don’t ?

No it isn’t true however as its dirt cheap there’s no reason not to. Driver Neg insurance doesn’t exist despite the protestations of agencies.

10

Conor:
For an extra £1/hr, no. Most of what you claim Ltd you can claim on PAYE anyway as an agency worker. One thing often overlooked in the quest for diddling the taxman as S/E is when you want to borrow money or get a mortgage. Lenders will only be interested in the net profit as a sole trader or what is on your P60 as Ltd. They won’t care that you earned double that but put half your wages through as expenses to lower your tax bill. They’ll just be interested in what the net amount you got paid not including expenses is as expenses are not seen as steady income.

When you come to draw your pension - a lower basic pay means you’ll get less pension as well, because you’ve paid less than full stamp on all your earnings for same reasons you’ve paid less tax. Salary Sacrifice means it isn’t worth getting any more pensions, and you really need one or two good ones paid up and under your belt before you consider such work. :bulb: Agency work on both PAYE and Self-Employed isn’t for the young driver I reckon. Too much to lose by not having a decent pension already set up… 20 years of underpaying later? - It’ll be too late and/or too expensive to start by this point…

11

Conor:

bjd:
A little off topic but is it true if your LTD company if you go direct to a company you need public liability ins where as if you go through an agent you don’t ?

No it isn’t true however as its dirt cheap there’s no reason not to. Driver Neg insurance doesn’t exist despite the protestations of agencies.

What does public liability insurance cost? I’ve just been quoted £172, which doesn’t sound cheap to me. Any advice gladly welcomed. :slight_smile:

12

There goes that extra pound you earned then.

Did s.e. one year and got chased for owing 250 in tax 12 months later. Never again.

These umbrella companies are now under the scrutiny of the inland revenue.

13

I don’t think you have to have PLI but the Company I’m a supplier too said they would prefer I had it so I did cost’s me £17 a month

14

Doc Hollyday:
What does public liability insurance cost? I’ve just been quoted £172, which doesn’t sound cheap to me. Any advice gladly welcomed. :slight_smile:

Anywhere between around £120 to what you’re paying. £3/week but actually £2.40 when you’ve saved tax for a few million quid of liability cover isn’t that bad. Certainly better value than the buildings insurance I pay. :smiley:

15

■■■■■■00:
These umbrella companies are now under the scrutiny of the inland revenue.

This can only be a good thing!

16

mas430:

■■■■■■00:
These umbrella companies are now under the scrutiny of the inland revenue.

This can only be a good thing!

They were meant to be under “scrutiny” years ago, was told this when I was using one about 12 years ago, and it doesn’t look like anything has been done in all that time if they are still operating!!

17

I’m in the process of becoming a ltd co and sounded a couple of agencies out as to the rates, driving isn’t going to be the mainstay of the business but another revenue stream, when asking about the rates and whether they are inclusive if VAT I received the following reply:

How it works is we process your hours on a weekly basis and you send us an invoice with a breakdown of your hours plus your VAT. Our head office then process the wages and pay your VAT

Is this normal? And if so do they pay the VAT direct to HMRC on my behalf? And what if I’m registered to use a flat rate scheme?

18

Ltd v PAYE… has been debated for years & still will be. It depends what suits the individual best, taking all options and info into account. Speak to Accountants, look at website (HMRC etc) and make your own informed choice; a lot of people on various forums make judgements & state facts without actually knowing the whole truth, or having had any experience of it etc.

Personally, it suits me. I’ve was PAYE for 20+ years, Self Employed for a few years and now Ltd Co for over 4 years; I find Ltd Co to be the most beneficial to me & my family and tax efficient.

You do have to be prepared to put in some extra time to do the books, invoicing etc.

Worth noting that recent Government figures showed that more people set up as Self Employed / Ltd Co in the last few years than ever before, it’s the fastest growing “Occupation Status” in the UK - therefore one they will probably look into more shortly as the Taxman’s PAYE TAX/NI income reduces.

Regarding comments made about:

Mortgages / Getting finance - haven’t had any issues, never been declined any financing. Despite the fact I pay myself a very low wage. Most banks etc (particularly the one you bank with) understand why people go Ltd Co and see what you really earn.

Insurance - you don’t need it (PL or Employers), I have never been asked for it by any Agency or Transport Co that I’ve worked for. I do have PL insurance for another side of my business (£60pa for £10mil cover). There is no difference between driving as a PAYE Agency driver or a Self Employed / Ltd Co Agency driver or direct - you drive under the transport co’s insurance.

Pension - again, it depends upon your future requirements. I will only have the basic State Pension when I retire, don’t have any additional Pension scheme (apart from a small one from years ago when I was PAYE), as in my opinion they are risky & costly (they restrict what you pay in, they charge you to look after it whether they make you more money via their investment strategy or not, restrict what you can take out and when & then tax you on it) - therefore, I have a simple savings plan (I pay what I want in when I want too, I earn interest, I can take what I want out when I want/need it, with no tax).

19

AF1:
I’m in the process of becoming a ltd co and sounded a couple of agencies out as to the rates, driving isn’t going to be the mainstay of the business but another revenue stream, when asking about the rates and whether they are inclusive if VAT I received the following reply:

How it works is we process your hours on a weekly basis and you send us an invoice with a breakdown of your hours plus your VAT. Our head office then process the wages and pay your VAT

Is this normal? And if so do they pay the VAT direct to HMRC on my behalf? And what if I’m registered to use a flat rate scheme?

No, they don’t pay your VAT direct to HMRC, you pay that after you have done your Quarterly VAT return. You invoice them, including VAT, they pay the full amount to you, you then deal with HMRC / VAT.

The rate you agree with them (daily or hourly) is plus VAT, not inclusive.

20

Herongate:

AF1:
I’m in the process of becoming a ltd co and sounded a couple of agencies out as to the rates, driving isn’t going to be the mainstay of the business but another revenue stream, when asking about the rates and whether they are inclusive if VAT I received the following reply:

How it works is we process your hours on a weekly basis and you send us an invoice with a breakdown of your hours plus your VAT. Our head office then process the wages and pay your VAT

Is this normal? And if so do they pay the VAT direct to HMRC on my behalf? And what if I’m registered to use a flat rate scheme?

No, they don’t pay your VAT direct to HMRC, you pay that after you have done your Quarterly VAT return. You invoice them, including VAT, they pay the full amount to you, you then deal with HMRC / VAT.

The rate you agree with them (daily or hourly) is plus VAT, not inclusive.

Thanks for clarifying that, the way they worded their reply threw me a bit.