Why is everyone always so obsessed with NI/TAX savings and expenses when talking about being self employed ?
I know you need to be aware of your liabilities when going self employed but surely it can’t be the main reason people take this route.
I’ve been self employed for a while now and the main reason was I’ve always wanted to work for myself and to get a bit of variety in my work. Also I can work when I want and for a rate I choose.
So far I’ve worked for general haulage tramping (artic curtainsider), tramping with fridge trailers for a subby, day/night/weekend shifts for a supermarket chilled contractor(artic), major supplier to building sites and merchants using a Moffett (26t rigid) and nationwide deliveries for a window company (18t rigid + artic curtainsider with Moffett).
If I have a quiet week with one of my regular direct customers I ring the one agency I occasionally use and get a couple of easy weekend shifts in.
If anyone is considering being self employed do it for the right reasons or you won’t enjoy it !
I have done nothing but go over endless calculations and had 4 meetings with my accountant about this very subject. Apart from a question I asked in a previous thread, for me it is a no brainer to go down the Ltd route, especially considering I have experience already of operating as a ltd.
One thing you have to bear in mind is IR35…there is plenty of info on here about it and the contractor calculator website. Basically if you can have at least 2 contracts in place then you should pass IR35 (although there other things to consider). I really encourage folk considering this approach to read about this little piece of legislation. However, according the HMRC, there are around 200-300 investigations made each year (there are probably about 900,000 small businesses in the UK employing 1-9 people) and I am yet to hear of truck driver operating as a Ltd being investigated.
It says ERF not RAF:
Why is everyone always so obsessed with NI/TAX savings and expenses when talking about being self employed ?
If anyone is considering being self employed do it for the right reasons or you won’t enjoy it !
I think the crux of these discussions/questions regarding this come from regular employed guys who have this selfemployed/umbrella/Ltd foisted upon them. They accept it (or don’t) and then ask questions about it.
Like you say, anyone who has been minded to take up a truely self employed route and done his homework will not have all the questions. He’ll know what he’s doing.
There’s also a lot of misinformation about that confuses people. Take for instance the recent thread of who pays the best in the North West ? Simple question you might think? Not so…
Reading it i came to a few conclusions. As far as i knew a typical wage was around £8 to £10 PH. I then found out through that thread that £80K per year was possible, although it wasn’t really possible as they where dead mans shoes jobs, or no longer renewable contracts. Also £12 PH was not a particularly good rate. Then we where shown that £1k per week was achieveable, although no ones saying where or how, but at any rate that was as self employed. Ergo…self employed, employed, dead mans shoes (i.e restricted entry jobs) are all mumped together when considering what is a pay rate?
I think a lot of people ask questions after these posts too as they are confused.
Then there the recent thread of how much it cost you to get your HGV licence, sadly for some they paid thousands. Only to find out, there’s no great demand!!
Anyway, i’m waffling. So if you’re self employed don’t you have to pay tax and NI ? 
Yes Mike…I totally agree with you. There is so much bogus and unhelpful information about. I think frankly to suggest £1k earnings a week is unrealistic when talking about starting self employed/limited companies. You are unlikely to be making this money at the start of this process but I’m sure it is possible long term.
For my own budget and forecast I have landed on £9 an hour for my workings and hoping to average a 37.5 hour week throughout the year, I feel this is a realistic target for year 1. Anything above that is a bonus. Ok that doesn’t equate to a lot, but, it is the a solid foundation for a forecast. I don’t think it is sensible to think you are going to go out there and get £15 an hour just because you are NOW self employed/ltd.
In my situation the greatest benefit comes from a significant reduction in National Insurance contributions. Corporation tax is similar to what Income Tax. Dividend payments are “affectively” tax neutral. However if you don’t need the money then you can put the profit from the business into a pension scheme which the government are encouraging at the moment. So yes you still pay tax on your earnings, it is just less 
If you are a person that needs to draw a reasonable salary each month (over £1500 lets say) to cover commitments, then perhaps staying PAYE is worth it. There are ways you can release capital from the business, directors loans for example. But this can get messy.
Anyway these are just my thoughts from someone who is going through this process right now.
I went s/e in 1996 not as a truck driver at the time though I had already done my class 1, driving trucks came a bit later, the point I would like to make is out of all the self employed people I know I don’t know many that put in less time overall than an employee on paye other than the ones that are v good at their job or are semi retired, whilst I understand the need to work out what you need to earn remember to factor in the lack of holiday and sick pay and other unforeseen circumstances that may stop you earning, for these reasons I think to gain maximum benefit from being s/e you will need to be flexible to working hrs
Andyroo:
What happens if a self employed driver like this has a scrape, or goods get damaged in transit, etc?
If the self employed driver doesn’t have a water tight terms of business that he gets his customers to sign which has a clause in it stating that he nor any of the representatives of his company are not liable for any costs or losses arising from actions of him or his employees then he leaves himself wide open to being sued.
It says ERF not RAF:
Why is everyone always so obsessed with NI/TAX savings and expenses when talking about being self employed ?
I know you need to be aware of your liabilities when going self employed but surely it can’t be the main reason people take this route.
Its the main benefit of doing so.
I’ve been self employed for a while now and the main reason was I’ve always wanted to work for myself and to get a bit of variety in my work. Also I can work when I want and for a rate I choose.
You can do that working for agencies. Its the main reason I used to do agency work.
Mike-C:
It says ERF not RAF:
Why is everyone always so obsessed with NI/TAX savings and expenses when talking about being self employed ?
If anyone is considering being self employed do it for the right reasons or you won’t enjoy it !I think the crux of these discussions/questions regarding this come from regular employed guys who have this selfemployed/umbrella/Ltd foisted upon them. They accept it (or don’t) and then ask questions about it.
Like you say, anyone who has been minded to take up a truely self employed route and done his homework will not have all the questions. He’ll know what he’s doing.
There’s also a lot of misinformation about that confuses people. Take for instance the recent thread of who pays the best in the North West ? Simple question you might think? Not so…
Reading it i came to a few conclusions. As far as i knew a typical wage was around £8 to £10 PH. I then found out through that thread that £80K per year was possible, although it wasn’t really possible as they where dead mans shoes jobs, or no longer renewable contracts. Also £12 PH was not a particularly good rate. Then we where[sic] shown that £1k per week was achieveable, although no ones saying where or how, but at any rate that was as self employed. Ergo…self employed, employed, dead mans shoes (i.e restricted entry jobs) are all mumped together when considering what is a pay rate?
I think a lot of people ask questions after these posts too as they are confused.Then there the recent thread of how much it cost you to get your HGV licence, sadly for some they paid thousands. Only to find out, there’s no great demand!!
Anyway, i’m waffling. So if you’re self employed don’t you have to pay tax and NI ?
Hello Mike C
I am guessing that the highlighted comments refer to me. Did you miss my post HERE ? As you can see, it is certainly not a “dead mans shoes (i.e restricted entry)” job; in fact anyone can do it. Also, common sense dictates that one would not divulge information on who the clients are for obvious reasons, just like I am quite sure you would not do so either if you’d grafted hard for years and gone through all the motions to get your name and face to the top of the pile.
Even if you use an average agency day driver hourly rate of a tenner an hour and time 1.5 after 8 hours you’re over a grand for 3x 15s and 2x 13s if you’re ltd co and vat rgd (£865 x 20% = £1038), so I’m not sure why a grand a week seems so unbelievable to a lot of members here. Those sort of hours are fairly easily achievable with the majority of (distance work) hauliers I’d say and that’s not even adding in any night out sustenance. Factor in a long weekend shift and increase the basic hourly rates by some margin from cutting out the agencies as I have and £1200-1300+ a week isn’t beyond the realms of possibilities.
Left hand down!:
Even if you use an average agency day driver hourly rate of a tenner an hour and time 1.5 after 8 hours you’re over a grand for 3x 15s and 2x 13s if you’re ltd co and vat rgd (£865 x 20% = £1038), so I’m not sure why a grand a week seems so unbelievable to a lot of members here. Those sort of hours are fairly easily achievable with the majority of (distance work) hauliers I’d say and that’s not even adding in any night out sustenance.
TBH I wouldn’t factor in the VAT aspect when it comes to making your point, because not all that money is yours, it looks a really nice figure on paper, but youll eventually have to pay HMRC a chunk of that VAT money. Not mention taking into account such as running costs, accountancy fees, equipment depreciation, fuel for the car ........ all taking a chunk out of those figures Also for the average Agency/ Freelance Ltd Co driver I doubt earing the grand a week without night out monies etc will be consistent, earning a grand a week is probably realistic several times a year ie: during bank holidays when the premiums are more likely guaranteed, & theres only 8 bank holidays a year. So Im guessing over the whole year the average is probably around £500 p/week taking into account the time you are stood down. I my case having worked 5 days so far this week (Bank holiday Monday - Friday) Im pushing £750-£800 so far before VAT and I still have a 6th shift tomorrow to do. But Those figures are not regular, so even I cannot claim bragging rights to those figures at a regular level
Left hand down!:
Factor in a long weekend shift and increase the basic hourly rates by some margin from cutting out the agencies as I have and £1200-1300+ a week isn’t beyond the realms of possibilities.
but is it consistent??
Left hand down!:
Hello Mike CI am guessing that the highlighted comments refer to me. Did you miss my post HERE ? As you can see, it is certainly not a “dead mans shoes (i.e restricted entry)” job; in fact anyone can do it. Also, common sense dictates that one would not divulge information on who the clients are for obvious reasons, just like I am quite sure you would not do so either if you’d grafted hard for years and gone through all the motions to get your name and face to the top of the pile.
Even if you use an average agency day driver hourly rate of a tenner an hour and time 1.5 after 8 hours you’re over a grand for 3x 15s and 2x 13s if you’re ltd co and vat rgd (£865 x 20% = £1038), so I’m not sure why a grand a week seems so unbelievable to a lot of members here. Those sort of hours are fairly easily achievable with the majority of (distance work) hauliers I’d say and that’s not even adding in any night out sustenance. Factor in a long weekend shift and increase the basic hourly rates by some margin from cutting out the agencies as I have and £1200-1300+ a week isn’t beyond the realms of possibilities.
No mate not directed at you. I know 100% its achievable, and i have never doubted a word you’ve said.
I was highlighting the point that there is a lot of confusion over wages and employment status. If i disagree with anything i’ll say, i’m not shy !!
peirre:
Left hand down!:
Even if you use an average agency day driver hourly rate of a tenner an hour and time 1.5 after 8 hours you’re over a grand for 3x 15s and 2x 13s if you’re ltd co and vat rgd (£865 x 20% = £1038), so I’m not sure why a grand a week seems so unbelievable to a lot of members here. Those sort of hours are fairly easily achievable with the majority of (distance work) hauliers I’d say and that’s not even adding in any night out sustenance.TBH I wouldn’t factor in the VAT aspect when it comes to making your point, because not all that money is yours, it looks a really nice figure on paper, but you
ll eventually have to pay HMRC a chunk of that VAT money. Not mention taking into account such as running costs, accountancy fees, equipment depreciation, fuel for the car ........ all taking a chunk out of those figures Also for the average Agency/ Freelance Ltd Co driver I doubt earing the grand a week without night out monies etc will be consistent, earning a grand a week is probably realistic several times a year ie: during bank holidays when the premiums are more likely guaranteed, & theres only 8 bank holidays a year. So Im guessing over the whole year the average is probably around £500 p/week taking into account the time you are stood down. I my case having worked 5 days so far this week (Bank holiday Monday - Friday) Im pushing £750-£800 so far before VAT and I still have a 6th shift tomorrow to do. But Those figures are not regular, so even I cannot claim bragging rights to those figures at a regular levelLeft hand down!:
Factor in a long weekend shift and increase the basic hourly rates by some margin from cutting out the agencies as I have and £1200-1300+ a week isn’t beyond the realms of possibilities.but is it consistent??
It can be consistent for some but not everybody.
peirre:
Left hand down!:
Even if you use an average agency day driver hourly rate of a tenner an hour and time 1.5 after 8 hours you’re over a grand for 3x 15s and 2x 13s if you’re ltd co and vat rgd (£865 x 20% = £1038), so I’m not sure why a grand a week seems so unbelievable to a lot of members here. Those sort of hours are fairly easily achievable with the majority of (distance work) hauliers I’d say and that’s not even adding in any night out sustenance.TBH I wouldn’t factor in the VAT aspect when it comes to making your point, because not all that money is yours, it looks a really nice figure on paper, but you`ll eventually have to pay HMRC a chunk of that VAT money. Not mention taking into account such as running costs, accountancy fees, equipment depreciation, fuel for the car … all taking a chunk out of those figures
VAT that the VAT man wants is essentially 10% of the invoice amount, generally around £100 per invoice. What are these running costs you speak of? Accountancy fees are £600/year for me. Not sure what equipment depreciation refers to either in this context. Fuel for the car would be same for an employed driver, although I of course claim for the work mileage. My business costs are negligible overall, not even worth mentioning.
Also for the average Agency/ Freelance Ltd Co driver I doubt earing the grand a week without night out monies etc will be consistent, earning a grand a week is probably realistic several times a year ie: during bank holidays when the premiums are more likely guaranteed, & there
s only 8 bank holidays a year. So Im guessing over the whole year the average is probably around £500 p/week taking into account the time you are stood down. I my case having worked 5 days so far this week (Bank holiday Monday - Friday) I`m pushing £750-£800 so far before VAT and I still have a 6th shift tomorrow to do. But Those figures are not regular, so even I cannot claim bragging rights to those figures at a regular levelLeft hand down!:
Factor in a long weekend shift and increase the basic hourly rates by some margin from cutting out the agencies as I have and £1200-1300+ a week isn’t beyond the realms of possibilities.but is it consistent??
Depends on the work load of the clients. The work is generally there but 70, 80+ hours a week knocks the crap out of me now and I need a week off to recover . I have done them, back in Aug/Sep last year when I needed the money to buy a car I wanted and did £5k in one month 
but I prefer a better balance of home life these days and generally only do 2-4 days per week, depending on my mood. I can certainly say for sure than £1k+ per week every week is easily doable where I do the bulk of my work.
So…lefthanddown…and where do you do the bulk of your work? haha
I agree with you.
I think the point is, yes it is possible to make more as an Ltd, that much is obvious. BUT people MUST do their homework before settling on this model. I am sure you spent plenty of time at the start of your career making sure everything was in order, and putting in the hours (not just in the cab). I think sometimes people just see what is possible and then see a copy of your bank statement and just throw themselves straight in the deep end without to much thought about the process of getting clients, getting clients to pay invoices, paying yourself correctly, paying tax correctly and on time, and the other weekly things you must do to keep up with paper work etc etc.
People should not think that by just having an accountant that earning an income will be as easy as PAYE. It is not. You need to keep your books, or pay more to someone else to do them. Keep contracts up to date. Keep all your paper work up to date. Remember to comply with IR35, and understanding what that means in terms of compliance etc etc.
However, that being said. I encourage anyone to take this route. It can be so rewarding. I am not just talking about the potential earnings. I am talking about the lifestyle choice and being you own boss and the freedom that brings.
trubster:
parkus:
trubster:
£9,440 Salary - No Tax, NI @ 12%
£7’000 in expenses paymentsHow does that work then; that would be £786.66/month salary, considerably less than minimum wage? Do you add a 12th of your expected end result dividends on top or keep some of last years profit to ‘top up’ your earnings or what? Or is that what the £7,000 expenses is for?
Surely it’s illegal to pay yourself below minimum wage. This is the only thing i don’t understand about being self-employed.
When setting up do you need that £7,000 as capital to fund the first year?
Also, what can you class as expenses? Is it like: £x.■■/per mile x milage + meal expenses + parking etc…? What do companies usually pay for, is it just wagon + fuel? If you need to fill up with diesel do you pay and charge them for it or do they give you a company fuel card?I think you have got it a bit wrong, I will explain the best I can
Below Minimum Wage - The National Minimum Wage is a something that a company director is not entitled to, so this does not apply.
Balancing the books is what the accountant gets paid to do, I can draw down on any amount at any time, as a “Director’s Loan” and at the end of the year it all gets worked out by the man in a suit.
£7000 Expenses was a rough estimate again, this is as you pointed out, ■■ miles @ xxp/mile, Meals, PPE, Uniforms, Laundry, Paper, Phone Bills… The list is potentially endless. - Effectively, everything you can put down as an expense is 20% cheaper as you get 100% tax relief, so you don’t have to pay the corporation tax on that amount. Ever wondered why just before April, many big companies go on a spending spree?
Not my truck so fuel card is nothing to do with the LTD Co Driver.
Hope that answers your questions.
Oh, and Welcome to TNUK
Thanks for the welcome! Been on here a while just never post because answers are already there for my questions lol.
So do you pay yourself a ‘directors loan’ each month/regularly to cover bills, etc at home instead of having a regular wage? That’s the part I don’t understand, as the way you have explained it looks like you only actually see the money earned at the end of the tax year.
jonesy1985:
People should not think that by just having an accountant that earning an income will be as easy as PAYE. It is not. You need to keep your books, or pay more to someone else to do them. Keep contracts up to date. Keep all your paper work up to date. Remember to comply with IR35, and understanding what that means in terms of compliance etc etc.
This is where the Umbrella companies excel, as theres loads of drivers who want the independence of working for themselves, but dont want the hassle of having to sort all the paperwork out
trubster:
bjd:
Morning all have any of you started out on your own as a self employed driver ? is it worth doing ? do you find work easy to get ? other than no holiday pay are there any drawbacks thanks in advance
Register a company at Companies House - Search “FormationsMadeSimple” - don’t buy any of the extra’s - you don’t need them.
Register for VAT and enrol on the flat rate scheme
Make a spreadsheet or get an invoice program
Open a business bank account
Knock on doors, agencies, companies etc.
That’s the starting steps, there is more than just the above, but not much more.
Here is a quick calculation I made on PAYE/LTD take home.
trubster:
In the last tax year my earnings were worked out like this (rough figures)Invoiced amounts - £46’000.00 (Including VAT) (£38’333 NET)
VAT Paid to HMRC - £4’600.00£9,440 Salary - No Tax, NI @ 12%
£7’000 in expenses paymentsWhich leaves £24’960 as “Profit” which is taxed at 20% (Corporation Tax)
£20’800 left in the kitty which is classed as a “Dividend” payable to the director tax free.
So on a £46’000 annual turnover which is very easy to do, as pointed out by LHD and Truckbling, you pay £1011 in NI, £4160 in Corporation Tax and £4600 in VAT and in your bank account you have been paid £36’228.57 - Based on a NET figure of £38’333. Just over £2000 off the NET figure.
Just by being enrolled on the flat rate scheme for VAT will cover both your VAT and corporation tax liabilities at no extra cost to you.
This is just a quick example I have slapped together and may not be 100% accurate, but it shows the picture.
Anyways, to carry on, comparing the PAYE vs LTD Contractor route, I did an online calculation based on 38’333 and here are the results.
Gross Pay £38,333.00
Tax free Allowances £9,440.00
Total taxable £28,893.00
xTax due £5,778.60
National Insurance £3,670.20
Total Deductions £9,448.80
Net Wage £28,884.20
Employers NI £4,227.91Not bad compared to the £36’288 that Mr LTD CO has in his bank! But, as everyone keeps reminding me, You get a few weeks holiday pay - not sure what that is worth but I am sure as hell nowhere near the £7403.80 that Mr LTD Co has in his account.
PLUS - I did an equal calculation there, but typically a LTD Contractor and PAYE Employee would not be on the same rate of pay.
all accurate except tax free allowance is now 10,000 from april 6th
jameskent:
trubster:
bjd:
Morning all have any of you started out on your own as a self employed driver ? is it worth doing ? do you find work easy to get ? other than no holiday pay are there any drawbacks thanks in advancetrubster:
In the last tax year my earnings were worked out like this (rough figures)
.all accurate except tax free allowance is now 10,000 from april 6th
See the bold bit
Evening folks, here again with more questions …sorry 
Agency rang back and we had a short conversation regarding me going forward with them. After a few questions which I suspect is the usual stuff they say (Drivers leaving due to cpc, plenty of work coming up with world cup, quiet in Jan and Feb) but once we got onto the question of how they pay the person said they would set me up as a LTD Company (Self Employed) with starting rates for Van driving at £7.25 and Class 2 at £8.55
So at that point I told him Thank you much, need to get have a word with She who must be Obeyed as it will be her wage supporting us whilst I get experience. So after some discussion and thinking…we still are non the wiser. So I am going to ring back to tomorrow with the following questions and I was hoping you fine folk here could possibly point me in the right direction as to what stuff I could read up about this ? I don’t want to go into it totally blind.
So I have these questions
Tax - Who will be responsible for it coming out my pay? Me or the Agency? As my pay is coming from them
Travel Expenses?
Would I need an O License? ( im guessing no because I wont actually own my own vehicle)
Will I be charged Pay Referral Fees?
Insurance/Damaged Goods/Damaged Vehicles - Who pays?
Are Breaks (Not) Paid for?
Any more I should add?
Thanks guys 
You are responsible for paying any tax your company makes. They are putting you on an umbrella scheme. The allowances are much better is you set up the ltd company and run it. As such unless they say there usual bs about only paying through there scheme. This is so they can make more money out of you and don’t for get the drivers negligence insurance
alix776:
You are responsible for paying any tax your company makes. They are putting you on an umbrella scheme. The allowances are much better is you set up the ltd company and run it. As such unless they say there usual bs about only paying through there scheme. This is so they can make more money out of you and don’t for get the drivers negligence insurance
should I ask as well , if the work was to dry up, am I limited to only working with companies they provide for or am I allowed to take “my company” and look for work else where to cover?