Torkey:
I’m wondering how you arrive at the ‘worth only 9 pence in your pocket’
.
.
The Tax Man (or HMRC as they are called) will allow you to
“not pay” the tax that you would normally pay on 45 pence.
(You certainly DO NOT benefit by 45 pence per mile)
The basic rate of tax is 20% or one fifth.
One Fifth of 45 pence is 9 pence.
(9 pence is the amount of tax that you would normally pay if you earnt 45 pence)
(HMRC is saying that you can keep the tax on 45 pence for every mile
under 10,000 that you do)
(He’s so kind. His generosity knows no limits)
So 9 pence per mile is the actual true amount that you are better off.
And if you do over 10,000 miles p.a., the allowance then
drops to 25p so you actually benefit by only 5p per mile.
.
.
I think you may have this wrong…
Even on PAYE when your employer pays you the 45p per mile for using your car for their benefit you actually get the FULL 45p per mile…
When you’re self-employed all it means is that instead being paid the 45p per mile you deduct it from your tax bill…
and don’t call me a silly billy…i’m offended…at least call me a ■■■■■
Terry T:
When I was LTD I paid full tax and NI on the minimum wage then paid the rest as a dividend attracting a lower rate of tax and no NI.
I think this keeps your pension intact.
Most I ever earned was £800 per week and I took home £680, including paying the management company. 5 days in a B&B for that though, would’ve been less with a normal commute.
why pay yourself minimum wage? it doesn’t apply to directors.
You could pay yourself £1 per week if you wanted, the fact is whatever you pay yourself comes off company profits, so provided you pay yourself less than your tax threshold you would pay no tax on that part of your earnings, then by reducing the remainder with expenses(night out allowance, mobile phone etc.) you would then pay corporation tax at 20% of whats left (if there is anything left!), after this is paid you take a dividend which you pay no tax on as the company has already paid it!
Torkey:
I’m wondering how you arrive at the ‘worth only 9 pence in your pocket’
.
.
The Tax Man (or HMRC as they are called) will allow you to
“not pay” the tax that you would normally pay on 45 pence.
(You certainly DO NOT benefit by 45 pence per mile)
The basic rate of tax is 20% or one fifth.
One Fifth of 45 pence is 9 pence.
(9 pence is the amount of tax that you would normally pay if you earnt 45 pence)
(HMRC is saying that you can keep the tax on 45 pence for every mile
under 10,000 that you do)
(He’s so kind. His generosity knows no limits)
So 9 pence per mile is the actual true amount that you are better off.
And if you do over 10,000 miles p.a., the allowance then
drops to 25p so you actually benefit by only 5p per mile.
.
.
I think you may have this wrong…
Even on PAYE when your employer pays you the 45p per mile for using your car for their benefit you actually get the FULL 45p per mile…
When you’re self-employed all it means is that instead being paid the 45p per mile you deduct it from your tax bill…
and don’t call me a silly billy…i’m offended…at least call me a [zb]!
But in reality, how many employers actually pay you 45p per mile for your journey to and from work?
You are allowed to pay employees up to the approved amount of MAPs each year without having to report them to HM Revenue & Customs (HMRC) or pay any tax on them. These tax-exempt payments are known as ‘approved mileage allowance payments’ (AMAPs).
If you are self employed … but only work for 1 agency ( so you are only invoicing 1 Co. ) … are you still classed as self employed ? Was talking to some-one about this … he said, thought HMRC might not class this as “self employed”, as you were only working for 1 Co. ?
mac12:
I hope the driver on here a couple of months ago is reading the last few posts he thought if he travelled hundreds of miles to work the tax man would pay him more than his work.
You could make money out of it IF as a contractor, you are earning so much you’re on 45p tax rate AND the vehicle you’re using belongs to your wife’s car pool, which she claims full fuel against as a business expense.
I don’t like commuting as it is, because I lose money with the system as it stands. It’s also compounded by the fact that if you do a 90 minute each way commute to a 10 hour job @ £10ph, you’re putting in 30% more of your time for free, effectively reducing the hourly rate to £7.69ph as well as losing 36p out of every 45 you’re spending on fuel.
If you’re not paid for your meal breaks, it’s even worse - £6.42ph (9 hours of pay divided by 13 hours of your total time spent going to/at work)
Terry T:
When I was LTD I paid full tax and NI on the minimum wage then paid the rest as a dividend attracting a lower rate of tax and no NI.
I think this keeps your pension intact.
Most I ever earned was £800 per week and I took home £680, including paying the management company. 5 days in a B&B for that though, would’ve been less with a normal commute.
why pay yourself minimum wage? it doesn’t apply to directors.
You could pay yourself £1 per week if you wanted, the fact is whatever you pay yourself comes off company profits, so provided you pay yourself less than your tax threshold you would pay no tax on that part of your earnings, then by reducing the remainder with expenses(night out allowance, mobile phone etc.) you would then pay corporation tax at 20% of whats left (if there is anything left!), after this is paid you take a dividend which you pay no tax on as the company has already paid it!
To be honest, I don’t know the full ins and outs of how the system worked. I was paid by an agency who in turn paid a company called Canford Management who then paid me. They charged £10 per week and did everything for me. I was paid weekly after all deductions and didn’t have to bother with tax returns etc. I was earning far more than I would’ve on PAYE so I was happy with it. I did it for nearly 8 years and every year I did it counted fully towards my state pension so my NI contributions were in tact too.
mac12:
I hope the driver on here a couple of months ago is
reading the last few posts he thought if he travelled hundreds of
miles to work the tax man would pay him more than his work.
.
.
Yes - over the years I’ve heard Agency Drivers saying that they don’t mind
trekking to such and such a place for work (often 40/50 miles away) because
they “get 45 pence per mile from the Tax Man.”
I wonder if they realise that approx 30 pence actually comes out of their pocket
to do a mile but only 9 pence per mile goes back in their pocket from the
Tax Man. And what about the unpaid time that it takes to commute ?
I explained this to a Driver on Southampton Docks last week.
He turned purple, I thought he was going to have a heart attack on me.
.
.
The Rustler:
If you are self employed … but only work for 1 agency ( so you are only invoicing 1 Co. ) … are you still classed as self employed ? Was talking to some-one about this … he said, thought HMRC might not class this as “self employed”, as you were only working for 1 Co. ?
According to what HMRC defines as self-employed, very few agency drivers are actually classed as such, especially those in an umbrella scheme with only one agency. HMRC are currently ignoring this as it suits the government to keep the unemployment figures down and they don’t want to rock the boat with the big supermarkets etc. but if you ask the tax office to confirm in writing that you are definitely classed as SE they will not do it, because it is not written in black & white anywhere. Hence if the economy does ever recover, there could be a big shock waiting for many bogus SE drivers and these umbrella schemes when the taxman comes knocking on the door.
Also, on the subject of the 45p a mile, yes some employers do pay the full amount - councils for example (my wife claims this for using her own car for home visits etc.) - as this is the amount that the government thinks is fair, however this payment is classed as ‘benefit in kind’ and will be taxed as well, even if you get the full amount initially.
tallyman:
On the subject of the 45p a mile, yes some employers do pay the
full amount - councils for example (my wife claims this for using
her own car for home visits etc.) - as this is the amount that the
government thinks is fair, however this payment is classed as
‘benefit in kind’ and will be taxed as well, even if you get the full
amount initially.
.
.
The figure of 45 pence is not in doubt - that’s the universally accepted,
average cost, of running a car - but some people are confusing
two different things :
The 45 pence that employers will reimburse their employees for using
their own car (usually for travel to specific, occasional events and
seldom from home to their regular place of work) and often this is
reduced to 36 pence when taxed at 20% or 27 pence if taxed at 40%
and
The Tax Free 45 pence that the Tax Man will not charge the normal
9 pence tax on, i.e. the 9 pence that actually goes into the pocket.
.
.
Wasn’t there a scandal a few years back over Hotel & Bar staff getting their minimum wage hourly rate made up of - TIPS!
So, if they were making £2ph in tips, they’d be on a minimum wage of £4.19ph made up to £6.19ph with the tips…
Well dodgy, but I understand totally legal because the minimum wage is actually being met. There’s no law that says you are allowed to be net-better off with tips.
Terry T:
To be honest, I don’t know the full ins and outs of how the system worked. I was paid by an agency who in turn paid a company called Canford Management who then paid me. They charged £10 per week and did everything for me. I was paid weekly after all deductions and didn’t have to bother with tax returns etc. I was earning far more than I would’ve on PAYE so I was happy with it. I did it for nearly 8 years and every year I did it counted fully towards my state pension so my NI contributions were in tact too.
Effectively Canford Management are acting as an umbrella service and you’re directly employed by Canford. The agency are a tool in which to find you work and process your timesheets, making all arrangements between yourself and the client, effectively.
Client pay the agency. Agency pay Canford. Canford pay you. Your security is in receiving the payment from the agency given the client will have something like 30 days to pay their invoices but the agency have an agreement to pay you weekly.
Terry T:
When I was LTD I paid full tax and NI on the minimum wage then paid the rest as a dividend attracting a lower rate of tax and no NI.
Not sure how the lower tax works given dividends are paid out of post tax profit and corporation tax on the profit is taxed at the same rate as the basic rate of income tax.
Terry T:
To be honest, I don’t know the full ins and outs of how the system worked. I was paid by an agency who in turn paid a company called Canford Management who then paid me. They charged £10 per week and did everything for me. I was paid weekly after all deductions and didn’t have to bother with tax returns etc. I was earning far more than I would’ve on PAYE so I was happy with it.
No you weren’t and if you were then you weren’t claiming the tax deductible allowances on PAYE you were entitled to. Most of the tax deductible allowances they applied to your S/E income were applicable if you were on PAYE the difference being you’d have to claim the money back on PAYE with a P87.
Bet you didn’t take into account the holiday pay you didn’t get…
Conor:
No you weren’t and if you were then you weren’t claiming the tax deductible allowances on PAYE you were entitled to. Most of the tax deductible allowances they applied to your S/E income were applicable if you were on PAYE the difference being you’d have to claim the money back on PAYE with a P87.
Bet you didn’t take into account the holiday pay you didn’t get…
The last time I worked through Canford was in 2005 so I’ll use them as an example.
My LTD rate was £16.60 per hour. The PAYE rate was £13.28. Back then the statutory holiday entitlement was only 4 weeks. So the yearly rates for a 37.5 hour week with 4 weeks off were …
PAYE - £25,896
LTD - £29,880
Then you had to factor in the lack of NI payments on the dividend. Not 100% on how all that worked and I didn’t really care, I had it briefly explained and the weekly take home figures for PAYE and LTD and went LTD, as did every other worker at the factory.
This was in engineering. As a whole, engineers don’t allow themselves to be walked all over like truck drivers do so the whole £1 extra for LTD wouldn’t wash, we used to get a quarter on top for either LTD or Umbrella.
The Rustler:
If you are self employed … but only work for 1 agency ( so you are only invoicing 1 Co. ) … are you still classed as self employed ? Was talking to some-one about this … he said, thought HMRC might not class this as “self employed”, as you were only working for 1 Co. ?
do the odd shift for a different client and you should be fine. My most regular client is DHL but with 2 different contracts on one site. Apparently that counts but i don’t trust that information so i do a shift elsewhere for a different client and agency every few months to make ■■■■ sure i keep my self employed status
.
.
Yesterday I was talking to a Driver about this subject. He works
for the Pertemps Agency, as a straight forward PAYE Driver.
His Agency are “well into the paperless society,” where job allocations,
Timesheets and even Wage Slips are done electronically, online.
He showed me his wage slip for last week on his laptop, it’s called ePay:
His gross wage was totalled up and then a lump sum was “moved
sideways” and stayed untaxed. This was called a “Notional MAP
Deduction” (MAP = Mobile Advantage Plan)
The remainder was subjected to Tax and National Insurance in the
normal way, then the untaxed amount was reintroduced and the
whole lot was paid into his bank.
The Driver didn’t have a clue how it all worked, he was just
grateful for the reduction in Tax and N Insurance. He said he had
never made any claim for food, mileage or anything else like that
but the deduction had been made automatically since day one.
(The MAP was described as “An HMRC approved tax free
allowance set up by Pertemps for mobile employees not working at
the same place for more than 24 months.” )
