ive been told to go self employed whilst being a temp agency work on PAYE. can anyone advise me if this is worth it or how to do it
thanks
tonybrown27:
ive been told to go self employed whilst being a temp agency work on PAYE. can anyone advise me if this is worth it or how to do it
thanks
Who told you to go “self employed”■■? The agency by any chance. Assume that is operating under a Ltd Co.?
If so, yes it can be worth it IF you know what it entails and how to operate a Ltd Company effectively in this industry - Please don’t do it just because the agency told you too or that you’d be better off. You can do it and be better off but you need to understand how to achieve this. Also PLEASE, PLEASE, PLEASE if you do it don’t do it via a 3rd party - such as an umbrella company as in all likelihood you are asking for trouble. Has the agency mentioned such a company who will sort all this out for you?? Lastly if its only a short term thing before seeking permanent employment then no, DON’T do it.
Yeah it was agency. They did try and tell me about umbrella Company. To be honest I would take any job offer if the money was ok. So i will take your advise and forget self employed. Although it sounds too good to be true.
tonybrown27:
Yeah it was agency. They did try and tell me about umbrella Company. To be honest I would take any job offer if the money was ok. So i will take your advise and forget self employed. Although it sounds too good to be true.
It’s not necessarily too good to be true but you need to know how to make it worth your while and pay effectively. Umbrella companies are a no no right off the bat and if your only going to be on temp work short-term then no it’s not worth it. Bear in mind also anything the agency tells you is for your benefit is actually a lie and its for theirs - Bottom line.
Understood. Thank u
I have gone the Ltd route as generally it is more tax efficient than being temp PAYE.
Setting up a Ltd Co is a doddle. 5 mins on Companies House website and £15 (even payable by PayPal) and you’re done. You’ll be incorporated usually within 24 hours.
However, after that there are various bits and pieces that you need to register. Corporation tax, PAYE (you’ll be paying yourself by PAYE, you’ll need a session with an accountant to explain the inns and outs) etc.
Further you’ll need to keep a record of all expenses (and the receipts to prove them) and be able to run a basic accounting package on the computer. You’ll also need to report any wages and expenses via HMRC’s portal.
You’ll also need to read up on passing yourself in dividends and the tax rules on this have just changed.
Most importantly you’ll need to be disciplined and put 20% of your income away and not touch it. You’ll need this to keep HMRC happy at the tax year end. Your accountant will make sure you keep as much of it as possible so you’ll probably end up with a bonus but in tax matters it is better to keep hmrc happy!
I enjoy the admin / accounts side - I’ve learned a lot doing it but then I’m an office bod at heart anyway.
There’s much less to think about being PAYE on someone else’s books and whether the potential extra income on offer going Ltd is worth it depends on whether you can keep in top of the accounts side.
As others have said avoid umbrella companies, they do not set up in business to make your life easy rather than to make money for themselves.
What potential extra income do you think you’ll get?
If you structure it right you only pay 20% corporation tax on everything after expenses, no income tax and no NI contributions although if you pay yourself the right amount hmrc will credit you for NI without you actually paying it.
From memory it’s around £7500-8000 you pay yourself as wages then take everything else out as expenses (so long as you can prove them of course) or dividends.
Even with the changes to dividend tax this generally works out better than PAYE on someone else’s books or self employed non-ltd.
I got a free hour with an accountant who explained it all in greater detail which is what I would suggest anyone going this route does also…
danthetrucker:
If you structure it right you only pay 20% corporation tax on everything after expenses, no income tax and no NI contributions although if you pay yourself the right amount hmrc will credit you for NI without you actually paying it.From memory it’s around £7500-8000 you pay yourself as wages then take everything else out as expenses (so long as you can prove them of course) or dividends.
Even with the changes to dividend tax this generally works out better than PAYE on someone else’s books or self employed non-ltd.
I got a free hour with an accountant who explained it all in greater detail which is what I would suggest anyone going this route does also…
BINGO! The threshold you are thinking of Dan is currently £671 a month (£8052 yearly).
Don’t forget that you can voluntarily apply for your LTD company to be VAT registered so that you claim back all the VAT you pay for your LTD + 6 months before VAT registering IIRC.
Also you can claim back all your expenses related to the company, your training costs being the biggest but also all the kit you need for the job, Sat nav, atlas, boots, gloves, whatever you needed to buy for the job. Even for things you paid for before setting up the company as long as you (the director of the LTD company) paid for them, there will likely be a time limit on these too but speak to an accountant ASAP.
As Danthetrucker said keep a record and keep the receipts.
An accountant is not cheap but I can tell you in the last 7 years of running another LTD company with the wife our accountant has not not only saved us pleanty of time but has always saved us far more than he has cost, plus the accountant is another expense 
You can also claim for all those things when working PAYE for an agency
Wow. I never knew that! So now I’m even more confused haha, is there any real benefit to having a limited company over just being self employed?
tonybrown27:
Wow. I never knew that! So now I’m even more confused haha, is there any real benefit to having a limited company over just being self employed?
There may be but its unlikely any agency will entertain you as a sole trader, can’t comment on whether that would apply going to companies direct as I have no experience there.
mac12:
You can also claim for all those things when working PAYE for an agency
Your right to point out that you can claim most of the same things on PAYE - involves filling out a P87 form although you have to wait until the end of the year to get anything back your owed.
I was going to write a long winded post but danthetrucker and warbital have summed up all the points I was going to make about how and why you can be better of as a Ltd Co. so just follow the advice in those posts.
No matter what some people just refuse to accept you can be so much better off financially operating as such rather than PAYE, you only have to see the numerous threads in the main section on the subject.
What can’t you claim for on PAYE that you can working for yourself? When you fill a P87 in you can do it yourself no need for an accountant and then the next year your tax code is adjusted so no waiting until the year end
You can claim back of you’re paye but you also pay ni which you don’t via a Ltd Co. Further, if you’re fortunate enough to earn enough to put you technically into higher tax you still only pay the 20% corporation tax.
Further, as you invoice the agency there is less chance of incorrect wages etc.
Being paid by two or more different companies complicates your tax position when paye also - having the freedom to work for who you want via a Ltd Co has advantages.
There are disadvantages too which you need to keep in mind. No holiday pay and other employment rights (such as there are being a temp) and the need to be disciplined when it comes to sing money side did tax so things need to be weighed up.
All in all, for me I’d take the Ltd route every time but it’s not right for everyone.
@tmcassett - I’ve spoken to a few drivers before I decided to go for it and they all work for agencies via their own Ltd Co. It’s less admin for them, no holiday pay to worry about etc so generally they welcome it.
danthetrucker:
You can claim back of you’re paye but you also pay ni which you don’t via a Ltd Co. Further, if you’re fortunate enough to earn enough to put you technically into higher tax you still only pay the 20% corporation tax.Further, as you invoice the agency there is less chance of incorrect wages etc.
Being paid by two or more different companies complicates your tax position when paye also - having the freedom to work for who you want via a Ltd Co has advantages.
There are disadvantages too which you need to keep in mind. No holiday pay and other employment rights (such as there are being a temp) and the need to be disciplined when it comes to sing money side did tax so things need to be weighed up.
All in all, for me I’d take the Ltd route every time but it’s not right for everyone.
@tmcassett - I’ve spoken to a few drivers before I decided to go for it and they all work for agencies via their own Ltd Co. It’s less admin for them, no holiday pay to worry about etc so generally they welcome it.
Again you’ve beat me to my point Dan - you need to stop doing that!!! lol . To me personally the benefits I get from being a Ltd Co. far outweigh the negatives and in my case I am considerably better off. Plus the way I view it being on the flat rate VAT scheme alone effectively cancels out the loss of holiday, sick pay and other employee perks that PAYE workers get. For me once those have been taken into account I’m still up financially. My accountant costs me £500 a year and for that all I have to do is drop my books in once a quarter and he does the rest for me. That £500 pays for itself several times over when compared against what I gain from a monetary point of view so its a no brainer.
As for your last point which was addressed to me, that’s actually what I meant and was referring to about working as a Ltd via agencies as technically your not self employed - which was the sole trader comment and most agencies not accepting them.
Talk go your accountant as well about protecting you from HMRC about “IR35” as well so you don’t get walloped by HMRC for tax dodging via low wages/dividend payment route.