Im thinking of going down the self employed route. Can anyone point me in the right direction as to how i actually go about it and the potential benefits and pitfalls. If anyone has any links to a step by step guide to setting yourself up and what you need to do or something along those lines it would be greatly appreciated. Thanks 
What benefit(s) do you see as being self employed 
I was trunking for Calor over winter but now im signed up with approximately 9 different agencies. One of the guys at Calor was self employed and briefly explained it to me. The fact you pay a lot less tax is appealing. I have a feeling (call me cynical) that the agencies give priority to the self employed too. Even though they generaly pay a pound an hour more it takes away their resposibility regarding holiday pay and N.I.
I’ve been signed on with these agencies for over 2 weeks now and have only had 3 days work and that was from the same agency and the pay rates are not great. Really i don’t know much about it and just need a lot more advice and more information. Im not thinking of going owner driver just self employed driver. I suppose in summary and answer to your question it will give me more flexibility and less headaches when it comes to trying to claim all the emergency tax back. Also a higher p/h pay rate and less tax paid over the year.
jad24369:
I’ve been signed on with these agencies for over 2 weeks now and have only had 3 days work
I don’t see that being self employed will increase the amount of work they have.
I don’t know a lot about how agencies view self employed but IF they do give preference to self employed over the rest, then it might be a worthwhile venture.
No it won’t Rog, but if my theory is correct about the self employed getting preference maybe it will
It must be more attractive to them surely? It’s less paperwork and paying out for them. Don’t you think?
I was self employed for 9 years, in another industry, I guess the rules are the same, I set up a limited company and registered for VAT. You do pay less tax as I payed myself the minimum wage to get by on, mortgage, gas, electricity all included in the wage along with other monies which were required on a monthly basis, the company also paid my expenses and a tax free sum to SWMBO, which is like a minimum wage, I paid an accountant ÂŁ365.00 per year to organise my finances and a yearly sum to produce and submit the accounts to companies house.
Each year the company would pay me a dividend which was based on how well the company had performed during the year, the payment was subject to NI, but not the standard rate of tax, the tax payable on this amount was corporation tax, again lower than the normal rate and would have longer to pay the tax amount too, so careful monitoring of company finances was required.
Provided you have work/contracts to provide your wages all should be well, remember though you don’t get paid for your holidays, that money would come from your bank account, I also had insurance for sickness and long term ill health should it have occured, thankfully I never needed it. If you’re thinking long term remember to pay yourself some pension.
Just a small insight I hope 
Stu
Thanks for the information Stu, what you have said is ringing a few bells with regards to what my former colleague at Calor said. I might sound like a bit of a dummy here, but how do you go about finding a good accountant for your money?
If i do go ahead i won’t do it until i return back to Calor for the winter. Once the winter season is over i’ll have the golden 2 years on my CE. So hopefully this will open up a few more doors for me and i’ll be able to sustain a consistent level of work all year round.
With regards to my former colleague. He told me he had earn’t almost £40k the previous year and only paid £4500 tax on it for the year. Does that sound about right or a similar sort of level you would have been paying?
I dont know much about agencies, but what I do know is that there are too many agencies chasing the same work, just the same as there are too many lorries on the road doing the same.
How else can you explain 7 agencies in my area advertising the same job? The job was actually filled 6 months ago and the company have not needed drivers since that time.
There is an ADR job advertised near me, it is also advertised in the job centre by an agency. The job has also gone
teatree:
Each year the company would pay me a dividend which was based on how well the company had performed during the year, the payment was subject to NI, but not the standard rate of tax, the tax payable on this amount was corporation tax, again lower than the normal rate and would have longer to pay the tax amount too, so careful monitoring of company finances was required.
Stu
Dividends
Directors receive dividends as shareholders in the company and not in their capacity as directors. Dividends are not earnings for the purposes of NIC.
Corporation tax is currently 21% for small companies.
I asked the agency i do some driving for about them paying me via my company and the difference was not worth doing, so I work for them on PAYE. They always have work for me whenever I want it.
As regards being self employed. I have a Limited Company that I am the sole shareholder of and submit accounts annually as well as an annual return to Companies House. This I do without the aid/cost of an accountant (it is not compulsory), and the accounts required are very simple these days.
He told me he had earn’t almost £40k the previous year and only paid £4500 tax on it for the year. Does that sound about right or a similar sort of level you would have been paying?
Not sure on the amount of tax payments, my self employed time is some years ago now. Smart Mart sounds a lot more upto date TBH.
Dividends
Directors receive dividends as shareholders in the company and not in their capacity as directors. Dividends are not earnings for the purposes of NIC.Corporation tax is currently 21% for small companies.
Thanks for the information Smart Mart, I’d forgotten the proper wording 
Do you know what the level of company earnings are before registering for VAT these days?
Stu 
teatree:
Do you know what the level of company earnings are before registering for VAT these days?
It’s about 60k I think, but that’s not important as even if you’re under it’s very much worth your while to do a voluntary registration and get on the flat rate scheme. For the sake of filling in a very simple form 4 times a year you effectively get about an extra 7% on your turnover, which could be worth 2 grand or even more if you manage to keep yourself in work.
Paul
Smart Mart:
I asked the agency i do some driving for about them paying me via my company and the difference was not worth doing, so I work for them on PAYE.
That surprises me, even for only an extra quid an hour I reckon it to be worthwhile.
Here’s my working out, as I’m in the same situation (Ltd. company, about 80% of my work I do direct to about half a dozen local hauliers, the other 20% via a couple of agencies)
Comparing £8/hour to £9/hour, you’re losing out on about a quid’s worth of holiday pay, which puts you back about even but you gain by only paying 21% corp tax on it and not 20% income tax plus 11% NI (after the first 105ish quid each week). That 10% alone means getting on for a quid an hour extra in your pocket after the first shift each week. Plus if you’re working for your company you can claim for mileage expenses (worth 8p/mile in tax savings, so £3.20/day if you travel 20 miles each way). Plus if you’re on the small companies VAT scheme you benefit a bit more from that too (about 7% for most people on here, which is another 50p/hour in your pocket on £9/hour).
So, for example, a 50h week at £8/h for 40h and £12/h for 10h on BR tax PAYE is £440 gross minus £88 PAYE tax and £37 NI is £315 net. On top of this there’s about £50 of holiday pay, which is taxable and therefore at most £40 in your pocket.
The same week at ÂŁ9/h for 40h and then ÂŁ13.50/h for 10h via your company is ÂŁ495, plus about 7% via the VAT scheme = ÂŁ530 in your company bank account. Even ignoring expenses such as mileage and just taking off 21% corp tax that is ÂŁ419 in your pocket, which is over ÂŁ100 more than by PAYE, reduced to ÂŁ60 more when you take off the ÂŁ40 holiday pay you would have got on PAYE. Depending on how far it is away you might see another ÂŁ10-ÂŁ20 per week benefit from claiming your mileage.
So via my own company on a full week’s work is going to result in something like £50 more in my pocket for a 50h.
I hope that makes sense and helps the OP when deciding whether to “go limited” or not.
Paul
Can’t argue with your figures Repton. Don’t forget also that if you pay yourself above the threshold for NI then you also have to pay the employers contribution 12.8%.
I only do occasiomal days for the agency though, around 15 days per year at present, which is why I decided not to bother.
Just a point though, that should also be considered by anyone going limited, is that if you only work for one company, as I understand it, you are now consider by HMRC to be a service company working solely for that company and therefore technically employed by them. This means that they have to pay your NI and I think PAYE - well thats how I understand it.
If like Repton and myself you work for several companies then that is not the case. HMRC are trying to close the loophole!
Smart Mart:
Just a point though, that should also be considered by anyone going limited, is that if you only work for one company, as I understand it, you are now consider by HMRC to be a service company working solely for that company and therefore technically employed by them. This means that they have to pay your NI and I think PAYE - well thats how I understand it.
Yes, you have to be pretty careful how you work it. The bit of legislation that you have to beware of is called “IR35”. If you only work for one company and/or you get the wording of your contract wrong you can end up “within IR35” which means all of your company’s turnover (other than a small percentage you can count as admin costs) is taxed as though it were PAYE income and so you lose almost all of the financial benefits of going limited.
Smart Mart:
HMRC are trying to close the loophole!
They’ve had a few goes and with each one the loophole gets a little bit smaller! Eventually they may well close it up altogether, time will tell…
Paul
Smart Mart:
67K for VAT registration apparently.
Yes but you can voluntarily register below that and now they have the flat rate scheme for small businesses it is very much worth your while. See the HMRC website as linked in Smart Mart’s post for full details but this is essentially how it works:
You add VAT (currently 15%) to all your invoices.
At the end of each quarter, you tot up all the (vat inclusive) money you have been paid in that quarter, and pay a fixed percentage of that to HMR&C. That fixed percentage depends on what industry sector you are in. For “Transport or storage” that is currently 8%, but for your first year you also get an extra 1% “bonus”, so that makes it 7%.
So for every ÂŁ100 you invoice, you add ÂŁ15 VAT, the customer pays you ÂŁ115.
You then pay 7% of that ÂŁ115 to HMR&C at the end of the quarter, which is a few pence over ÂŁ8.
This leaves you £107, so you’ve effectively got £107 in your company bank account instead of the £100 you would have had if you weren’t registered.
This 7% on a 25k turnover is is ÂŁ1750 gross or a few quid short of ÂŁ1400 in your pocket after 21% corporation tax. Not bad for the sake of filling in a VAT return 4 times a year, taking less than half an hour each time.
Paul
Is there any chance one of you guys could put an idiots guide type blog together for going down this route. Im sure it all becomes clearer when you are doing it for real, but it all seems a bit daunting for someone like myself who knows very little about this sort of thing.
All the advice and explanations are very interesting. Thanks for all the feedback. Its much appreciated.
All the information is available in fairly simple and easy to understand form on the web.
You should perhaps have a look on the Companies House website first:-
There you will find guidance leaflets on starting a new company.
Also HMRC run courses at no cost that you can go on, which explain what you need to know. They also produce a CD for businesses which has a lot of good information as well as calculators for tax and NI. You can also submit returns online now - in fact soon it will be compulsory.
Basically, I don’t think anyone could give you an idiots guide, you have just got to read whats available - or you could go to an accountant who would charge you (probably a lot!), but there is nothing rocket science about it.
Thanks Smart Mart the advice is much appreciated 