Hey up guys im considering going the self employed route but I was just wondering once I choose an accountant etc how do you put your tax and NI contributions aside ? for instance if your earning £500 a week do you kind of stash £100 aside every week till you get your tax bill etc ? ive never really though about how it all works really. Sorry if it seems a dumb question.
Also lets say that after 5 months you accept a job on PAYE what happens then in regards to the previous 5 month self employed ?
I pay George by direct debit of £200/month. Once my accountant files my tax return, HMRC send me a bill, minus the 12 installments. The balance is then paid in January, half and the other half in July, again minus what I have paid inbetween. It’s usually a few hundred each time, not much at all. I get a bill for my NI every six months.
tobytyke:
Hey up guys im considering going the self employed route but I was just wondering once I choose an accountant etc how do you put your tax and NI contributions aside ? for instance if your earning £500 a week do you kind of stash £100 aside every week till you get your tax bill etc ? ive never really though about how it all works really. Sorry if it seems a dumb question.
Also lets say that after 5 months you accept a job on PAYE what happens then in regards to the previous 5 month self employed ?
I always thought you were supposed to stash 1/3 away for tax and NI although a decent accountant will have you paying a lot less than that.
I would assume that for any period within a tax year you were self employed you would do a self assessment, which a accountant should help you with too if your not sure.
When you choose your accountant, tell him how much you expect to earn and he will tell you what your annual tax bill is likely to be. Then divide it by twelve if you want a monthly figure.
OnlyAlan:
When you choose your accountant, tell him how much you expect to earn and he will tell you what your annual tax bill is likely to be. Then divide it by twelve if you want a monthly figure.
Then add another 10% + to cover unexpected eventualities, running costs, and for “Rainy Day money” to cover those times of the year when work is lean
If you go Ltd Co instead, its easier as your own company pays your stamp & paye monthly for you
tobytyke:
I’m considering going the self employed route.
.
Look carefully before you leap. Self Employed does not benefit everyone.
With £500pw earnings you lose £2800pa Holiday Pay for starters.
You also lose the cost of an Accountant/Financial Advisor/Umbrella. Up to £1500pa.
With £500pw earnings you could save just £8pw National Insurance but
lose any Sick Pay and Redundancy Pay.
Don’t be sucked in by talk of “10 quid a day for food and 45 pence per mile.”
It’s the Tax + NI that you save on the £10 or 45p - that’s really only 29 percent of those figures - £2.90 or 13 pence - it certainly costs me more than 13ppm to run my car.
You can claim that if you’re on PAYE with an Agency anyway.
Don’t forget that HMRC can hammer you if you cannot prove your claims.
There is a clamp down on fiddlers and they want to see more and more
valid receipts. They can also check your travelling distances if you are
chosen for “close scrutiny and compliance.”
Earlier this year my mate got done by HMRC for almost 3 grand.
.
Dieseldoforme:
tobytyke:
I’m considering going the self employed route..
Look carefully before you leap. Self Employed does not benefit everyone.With £500pw earnings you lose £2800pa Holiday Pay for starters.
You also lose the cost of an Accountant/Financial Advisor/Umbrella. Up to £1500pa.
With £500pw earnings you could save just £8pw National Insurance but
lose any Sick Pay and Redundancy Pay.Don’t be sucked in by talk of “10 quid a day for food Andrew 45 pence per mile.”
It’s the Tax + NI that you save on the £10 or 45p - that’s really only 29 percent of those figures - £2.90 or 13 pence - it certainly costs me more than 13ppm to run my car.
You can claim that if you’re on PAYE with an Agency anyway.Don’t forget that HMRC can hammer you if you cannot prove your claims.
There is a clamp down on fiddlers and they want to see more and more
valid receipts. They can also check your travelling distances if you are
chosen for “close scrutiny and compliance.”Earlier this year my mate got done by HMRC for almost 3 grand.
.
You have never been a Ltd Co before have you!!!
I can tell you now 100% that you do get 45p for every mile and £10 per day as long as the day is 10hrs not the tax off those amounts, they are claimed as business expenses.
My advice to the OP is don’t listen to people who have obviously only ever been PAYE go and have a chat with a accountant not someone who is after your business/umbrella co, a proper financial adviser for advice on this.
I was at least £60 a week in my pocket when on self employed compared to now, and that was class 2 rate. I’m now full time class 1, I would have been invoicing for approx £900pw on a 6 day week with about 90-100 in deductions if I had stayed on it, I wanted a regular start time and guaranteed work after xmas so took the job on offer.
whats involved in going ltd company then ? costs / advantages ? difference between self employed and ltd is what ?
NewLad:
You have never been a Ltd Co before have you!!!I can tell you now 100% that you do get 45p for every mile and £10 per day as long as the day is 10hrs not the tax off those amounts, they are claimed as business expenses.
My advice to the OP is don’t listen to people who have obviously only ever been PAYE go and have a chat with a accountant not someone who is after your business/umbrella co, a proper financial adviser for advice on this.
I was at least £60 a week in my pocket when on self employed compared to now, and that was class 2 rate. I’m now full time class 1, I would have been invoicing for approx £900pw on a 6 day week with about 90-100 in deductions if I had stayed on it, I wanted a regular start time and guaranteed work after xmas so took the job on offer.
OK
NewLad:
If I had stayed on it - I wanted a regular start time and guaranteed work
after xmas so took the job on offer.
Doesn’t benefit everyone then, does it ?
.
tobytyke:
whats involved in going ltd company then ? costs / advantages ?
.
He said he was “60 quid a week better off in his pocket.”
I wonder when he paid his tax bill.
I’d rather be PAYE and take bottles from Barnsley to Banbury for
Nobby.
.
tobytyke:
Hey up guys im considering going the self employed route but I was just wondering once I choose an accountant etc how do you put your tax and NI contributions aside ? for instance if your earning £500 a week do you kind of stash £100 aside every week till you get your tax bill etc ? ive never really though about how it all works really. Sorry if it seems a dumb question.
Also lets say that after 5 months you accept a job on PAYE what happens then in regards to the previous 5 month self employed ?
The best way not to end up in the crap is as follows:
-
Do a household expenses spreadsheet and work out just how much you actually need from your earned income to pay the bills and only pay yourself that regardless of how much you earn.
-
Pay everything else into the highest interest ISA account you can. It’ll allow you to continue to pay yourself a wage when there’s no work.
If you accept a PAYE job after 5 months and pack in self employed you just de-register as S/E or just keep it handy. When you do your tax return there’s a section for PAYE and self employed income.
NewLad:
I always thought you were supposed to stash 1/3 away for tax and NI although a decent accountant will have you paying a lot less than that.
If you need to do that you need to find a better accountant.
gov.uk/simpler-income-tax-s … d-expenses
hmrc.gov.uk/incometax/relief-self-emp.htm#1
“Expenses are business costs you can deduct from your income to calculate your taxable profit. In practice, this means your allowable expenses reduce your Income Tax.”
£30000 Income
£ 6000 - Expenses
£ 9440 - Personal Allowance
£14560 Taxable at 20 percent
Your 45 pence mileage has only saved you 9p in Income Tax.
It only saves you 5p for miles over 10,000 miles pa.
.
Dieseldoforme:
NewLad:
You have never been a Ltd Co before have you!!!I can tell you now 100% that you do get 45p for every mile and £10 per day as long as the day is 10hrs not the tax off those amounts, they are claimed as business expenses.
My advice to the OP is don’t listen to people who have obviously only ever been PAYE go and have a chat with a accountant not someone who is after your business/umbrella co, a proper financial adviser for advice on this.
I was at least £60 a week in my pocket when on self employed compared to now, and that was class 2 rate. I’m now full time class 1, I would have been invoicing for approx £900pw on a 6 day week with about 90-100 in deductions if I had stayed on it, I wanted a regular start time and guaranteed work after xmas so took the job on offer.
OK
NewLad:
If I had stayed on it - I wanted a regular start time and guaranteed work
after xmas so took the job on offer.Doesn’t benefit everyone then, does it ?
.
Like I said you have never been Ltd Co.
So whats with the “ok”?
If it’s to do with the invoice amount work it out for yourself 84hrs in a 6 day week paid straight through Tuesday - Sunday. Weekdays @ £11ph and weekends @ £13ph add in 3 nights out a week and your over 1k on the invoice. 6 x £10 tax relief for meals, 30 miles commute to/from work @ £0.45ppm and recipts for any other “expenses” you in cure (I used to claim for razors, shower gel, shampoo, shaving foam, tooth paste).
No your right it doesn’t suit everyone, I never had any intention of being self employed/Ltd Co, however I had only just entered the industry (full time) and I wanted a start, as soon as I was offered full time employment I took it as that is what I wanted, but if I ever lost my job, I wouldn’t hesitate to do it again if I needed to. Obviously the OP has thought about the suitability for his home life, otherwise he wouldn’t have posted it.
Like I said mate get some proper advice and not off me or Mr Doom and Gloom
I know some of you will take what i’m about to say completely the wrong way.
If you are planning on becoming self employed or starting a Ltd company and your first thoughts are “I need an accountant”, Then the simple answer is “You are not ready”.
Get a tax return from your local HMRC office and as many free booklets you can. Study and absorb all the info before throwing money down the drain.
When you start employing people it’s a different matter. Make sure you use a local accountant, They will know about local authority tax breaks on rates and that sort of thing, As well as national and international tax breaks.
£500 per week as self employed is not realistic. You should run it as a business, Not as a freelance employee.
You have running costs. Phone, advertising, stationary, fuel, insurance, and your time needs paying for when you’re running your business. So £1000 per week is a realistic minimum.
NewLad:
Dieseldoforme:
NewLad:
You have never been a Ltd Co before have you!!!I can tell you now 100% that you do get 45p for every mile and £10 per day as long as the day is 10hrs not the tax off those amounts, they are claimed as business expenses.
My advice to the OP is don’t listen to people who have obviously only ever been PAYE go and have a chat with a accountant not someone who is after your business/umbrella co, a proper financial adviser for advice on this.
I was at least £60 a week in my pocket when on self employed compared to now, and that was class 2 rate. I’m now full time class 1, I would have been invoicing for approx £900pw on a 6 day week with about 90-100 in deductions if I had stayed on it, I wanted a regular start time and guaranteed work after xmas so took the job on offer.
OK
NewLad:
If I had stayed on it - I wanted a regular start time and guaranteed work
after xmas so took the job on offer.Doesn’t benefit everyone then, does it ?
.Like I said you have never been Ltd Co.
So whats with the “ok”?
If it’s to do with the invoice amount work it out for yourself 84hrs in a 6 day week paid straight through Tuesday - Sunday. Weekdays @ £11ph and weekends @ £13ph add in 3 nights out a week and your over 1k on the invoice. 6 x £10 tax relief for meals, 30 miles commute to/from work @ £0.45ppm and recipts for any other “expenses” you in cure (I used to claim for razors, shower gel, shampoo, shaving foam, tooth paste).
No your right it doesn’t suit everyone, I never had any intention of being self employed/Ltd Co, however I had only just entered the industry (full time) and I wanted a start, as soon as I was offered full time employment I took it as that is what I wanted, but if I ever lost my job, I wouldn’t hesitate to do it again if I needed to. Obviously the OP has thought about the suitability for his home life, otherwise he wouldn’t have posted it.
Like I said mate get some proper advice and not off me or Mr Doom and Gloom
Are company’s more likly to take you on if your self employed/limited co with no expirance ? Than to employe you direct with no expirance ?
NewLad:
If it’s to do with the invoice amount, work it out for yourself:84hrs in a 6 day week paid straight through Tuesday - Sunday.
Weekdays @ £11ph
Weekends @ £13ph
add in 3 nights out a weekYou’re over 1k on the invoice.
6 x £10 tax relief for meals = £12 less tax but it cost you £60.
30 miles commute to/from work @ £0.45ppm = £16 less tax but it cost you £80.And receipts for any other “expenses” you incur. I used to claim for
razors, shower gel, shampoo, shaving foam, tooth paste = Free Balloons.
.
Well it’s good to see that you have put forward a fair example - like a six-day working week that includes the whole weekend, 15 hour days and 13 hours days. And three nights out - not five but only three. I bet you even took off 9 hours for breaks, just to give a fair picture of what self employed means. And you did 84 hours EVERY week I suppose.
Come clean.
What were the Hours Worked, Gross Earnings, Tax Allowances and Nett Pay for the financial year in question ? No doubt you have a copy of your Tax Return so you won’t have to massage any figures to make it look good.
.
jrt:
Are company’s more likely to take you on if you’re self employed/limited co.,
with no experience, than to employ you direct with no experience ?
.
My advice to any newcomer with little experience would
be to use an Agency on PAYE.
A good Agency (if there are any left) should know where they could
“slip you into” a company that has no restrictions. Tell them your
situation and register with as many as possible.
In many cases it is the insurance company that dictates the requirement
for two year’s experience. In that case you wouldn’t get a start whether you
are self employed or not.
.
I can only speak from my experience.
I am £100s better off per month being SE. My accountant saves me in tax MORE than he charges me every year. I claim every penny I possibly can. I run as a LLP and have been doing so for 5 years.
Those that say you don’t get holiday pay as SE as talking nonsense, yes you don’t get a payment if you don’t work, but the rates you charge reflect this, you simply build your holiday pay into your daily rate.
People expect to pay more for SE workers and I’ve NEVER had an invoice queried beyond asking for a breakdown.
Thee only down side I have experienced from being SE are there are days (very few) when I’m parked up, generally because a job gets cancelled, this happens to ALL the PAYE staff at all 3 of my regular customers. I usually use this time to tend to my other revenue streams.
On the whole, if you want an easy life with next to bugger all to show for it stay PAYE if you have an idea of your worth and can build a good reputation then go SE, but do it properly and either set up a LTD or LLP, oh and register for VAT. It adds ball ache but with a decent accountant can benefit you substantially.
Cheers
BB