Ive recently changed jobs having thrown my teddy in the corner having been messed about once too often, and have signed up with an agency. They have insisted that I become a limited company/self employed and use an umbrella company. Apparently I can earn more this way and save a fortune on tax.
Ive no clue how this system works and don’t particularly want to fall foul of the tax man (again!).
Can anybody give me some pointers on what this minefield is all about, how best to tackle it, and how much its all going to cost?
regards,
Seriously Confused from Sutton Coldfield!!!
Go limited don’t use an umbrella company whatever you do!! Im a limited driver and i earn 18 quid an hour, i get to keep 15 of that and other stuff i claim for! The agency may have an accountant the other drivers use, I use ‘We Are Accountants’ in High Wycombe. You’ll need to register a company with companies house, it’s easily done online. Once you have your certificate of corporation you can open a business account and you’re there! A good accountant will help you with it. Im VAT registered also and i pay my accountant 48 quid a week which is a little higher than some but they’re very good and i claim a lot back. Good luck mate!! 
If you can get the work and the +£15 p/h rate then LTD is the best way to do go. But, if you’re approaching this as a new driver you are going to struggle to convince companies or agencies to take you seriously in which case you should seek to be paid PAYE and then claim back your expenses when you fill in your end of year tax return.
Connor will confirm that PAYE earners are entitled to claim expenses the same way as those who claim in LTD/sole trader examples. Although HMRC are cracking down on sole traders in this industry as many fail the employment tests. Their investigations are only going to increase.
I want to go down the LTD route eventually, but to date not one company has been interested in contracting me because of my lack of driving experience. Understandable really. Agencies often offer an increase of £1 an hour above their PAYE rate, frankly at the start of your career I would accept PAYE. The extra £1 an hour is barely worth it. For LTD to pay better than PAYE in this situation you would have to have very regular work to match the benefits of Holiday and sick pay that come with PAYE.
Others I am sure will have differing opinions, but it is my view you will have more monetary success starting your career on PAYE and paid directly from the agency. Avoid Umbrellas if you can, they only offer to sort out your expense claims on your behalf which you can easily do yourself and therefore not have to pay them a fee. There are also new umbrella regulations and more to come because Dave has recognised that they are only cashing in on other people’s earnings.