Agencies seem very keen for Drivers to go self employed so
there is obviously something in it for them. I am suspicious.
Self employed usually get £1 per hour extra but that does not
even cover the 28 days Holiday Pay that they have lost.
I’ve got it in black and white that a Pay As You Earn (PAYE) Agency
Driver can claim 45p per mile tax free travel to and from work.
I’ve got it in black and white that a PAYE Driver
can get £5 tax free food allowance if out for 5 hours.
(Does not apply to packed lunches)
I’ve got it in black and white that a PAYE Driver
can get £10 tax free food allowance if out for 10 hours.
(Does not apply to packed lunches)
I’ve got it in black and white that a PAYE Driver
can do something known as “Salary Sacrifice” which
reduces Tax and National Insurance so that MORE
take home pay is achieved.
All above are HMRC approved.
Does being Self Employed affect your unemployment benefit,
sickness benefit, child benefit or State Pension ?
(I ask because I am not sure.)
So . . . What is the benefit of going self employed ?
I’m self employed, not for an agency though.
The place I do the bulk of work for pay an extra £4 per hour for self employed, the down side is no holiday or sick pay, and they can drop you like a hot rock if it goes quiet.
While all is good and if done properly (VAT flat rate etc.) and a good accountant you can make a lot more money.
the agency/employer like it because there is no commitment to you, they wont have to make reduncancy payments or pay you for 6 months if your off sick.
some, like me prefer to be self employed but the risk is a bit higher, some prefer the security of being paye.
wood73:
I’m self employed, not for an agency though.
The place I do the bulk of work for pay an extra £4 per hour for self employed, the down side is no holiday or sick pay, and they can drop you like a hot rock if it goes quiet.
While all is good and if done properly (VAT flat rate etc.) and a good accountant you can make a lot more money.
the agency/employer like it because there is no commitment to you, they wont have to make reduncancy payments or pay you for 6 months if your off sick.
some, like me prefer to be self employed but the risk is a bit higher, some prefer the security of being paye.
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Thanx 4 that.
£4 an hour extra seems to be exceptional and not the norm. You are very lucky.
Would you personally make “a lot more money” if you were on the
normal “quid an hour extra” ?
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For an extra £1 an hour, using the VAT flat rate, and a decent accountant It would still be worth my while, but it does depend on how many holidays and or sick days you were to take.
i make a lot more money as self employed and i am about to make even more as a supervisor but i dont take more than about 10 days a year off so holiday pay doesnt bother me. i always lost most of my holidays
just for the record, if you are self employed you are a sub contractor, not an agency driver
wood73:
For an extra £1 an hour, using the VAT flat rate, and a decent accountant It would still be worth my while, but it does depend on how many holidays and or sick days you were to take.
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Well I was given a simple example for a comparison :
PAYE Driver works 50 hours per week @ £10 ph for 46 weeks = £23,000.
PAYE Driver gets 6 weeks Holiday Pay @ £500 pw = £3,000.
TOTAL PAY £26,000 pa.
S/E Driver works 50 hours per week @ £11 ph for 46 weeks = £25,300.
S/E Driver gets no Holiday Pay.
TOTAL PAY £25,300 and pays for an accountant.
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wood73:
For an extra £1 an hour, using the VAT flat rate, and a decent accountant It would still be worth my while, but it does depend on how many holidays and or sick days you were to take.
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Well I was given a simple example for a comparison :
PAYE Driver works 50 hours per week @ £10 ph for 46 weeks = £23,000.
PAYE Driver gets 6 weeks Holiday Pay @ £500 pw = £3,000.
TOTAL PAY £26,000 pa.
S/E Driver works 50 hours per week @ £11 ph for 46 weeks = £25,300.
S/E Driver gets no Holiday Pay.
TOTAL PAY £25,300 and pays for an accountant.
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ok but on the VAT flat rate you actually charge£30,360, you then pay the VAT man £3036, leaving you with £27,324.
If done properly with a limited company, after a directors salary, and mobile phone expenses etc. etc. you end up paying far less tax and n.i. than as paye, and so save yourself another couple of grand per year, and pay the accountant £700 per year, you still end up a good bit better off.
And that example you use 6 weeks holiday pay, wherever ive worked in the past they have only ever given 4 weeks paid holiday, and that is usually at 40 or 45 hours.
As said you can make more money, and I do, but the risk is greater.
wood73:
And that example you use 6 weeks holiday pay, wherever ive worked in the past they have only ever given 4 weeks paid holiday, and that is usually at 40 or 45 hours.
As said you can make more money, and I do, but the risk is greater.
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That’s history. Holiday rules have changed.
Full Time (5 days or more) PAYE employees are now entitled to 28 days paid holiday pa.
I rounded it up to six weeks for simplification.
Pity we don’t have actual figures for Directors and phones etc. so that we
can do a fairer comparison.
I am convinced that PAYE can claim for many more things than we think.
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directors salary £641 per month, keeps you below income tax threshold, but still entitles you to a full state pension.
my phone works out £36 per month on a business contract with unlimited free calls ( but to be honest most people have a contract phone, but as a limited company it becomes a company phone) There are other allowances etc. to give tax relief.
after all expenses, company pays 20% corporation tax on whats left, you then take a dividend which is basically tax free.
it is complicated, but that’s why an accountant comes in handy, so basically I work a week, send in a timesheet and invoice (takes 10 mins), they pay into bank, I transfer as much as I require into personal bank, accountant sorts out the rest.
when you are registered for vat you charge (as per example) £11 per hour + vat, £13.20 per hour, the vat makes no difference to the ‘employer’ as they claim it back on their vat return.
on the flat rate scheme you pay the VAT man £1.32 giving you the extra 88p per hour as income.
We pay less tax so its not all about gross. Nett is the key figure. I paid £1761 in January then £880 in july. £68 every 6 months in national insurance.
plus i can work for whoever i like without a tax penalty. An employed driver whether full time or agency would have to pay a higher tax rate on a second job. 2 agencies mean 1 is the main employer and the other is taxable at the higher rate
scanny77:
We pay less tax so its not all about gross. Nett is the key figure. I paid £1761 in January then £880 in july. £68 every 6 months in national insurance.
I agree on the NI contributions…
Yet another calculation for peeps to consider…
PAYE on £500 (£10pph - 50hrs a week/52 weeks) a week would see you pay £42.12 in national insurance contributions -
Gross £26,000
NI £2,190.24
Tax £3,312
NET £20,497.76
Gross £26,400
Class 2 NI stamp @ £2.70 a week =£140.40 per year
Tax: Even if you only claim 157 miles a weeks mileage allowance then you wouldn’t pay ANY tax
NET£25,859.60
£5361.84 better off being self employed…and that’s with having 4 weeks off annual leave…
add to that the VAT income from flat rate you would be looking in excess of 7000 per year extra, or £135 per week in your pocket.
for me its a no brainer!
Gross £26,400
Class 2 NI stamp @ £2.70 a week =£140.40 per year
Tax: Even if you only claim 157 miles a weeks mileage allowance then you wouldn’t pay ANY tax
NET£25,859.60
£5361.84 better off being self employed…and that’s with having 4 weeks off annual leave…
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Is that a fair comparison ■■?
PAYE get mileage allowance, food allowance and almost SIX weeks paid holiday but some get more paid holidays.
That wipes about 4 grand off your £5361 claim. Isn’t that misleading ?
What benefits don’t self employed get? What about State Pension?
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