Hello
I am sick to the back teeth of my current job and being treated and spoke to like ■■■■ for a pittance!
I am considering the possibility of setting up as a Limited company and using various Agencies for work, one of them is Nexus.
Can anyone give me pointers please?
Yes. It’s not worth the hassle.
toonsy:
Yes. It’s not worth the hassle.
Why?
If you go as a Ltd driver (when clearly it isn’t the case that you are a proper Ltd Company), you need to make sure that your rate of pay covers sick pay, holiday pay, pension and that if you don’t get work, it covers being stood down.
In April HMRC are revising the rules about drivers having Lts Co status.
And finally and somewhat sanctimoniously, the big idea about having a Ltd company is that you can then pay yourself dividends and save yourself a wodge in tax. Just my opinion, but do that and you lose the right to whine about anything to do with public services because it’s everyone trying to avoid paying tax that reduces the money available and yes yours is a teeny weeny amount compared to Amazon and all the others who pay diddly squat but that doesn’t mean to say that th elittle man on the street shouldn’t cough up. I didn’t pay myself dividends and I ran a proper Ltd company.
In a bad mood BTW having spent an hour on the phone to British Gas FFS.
albion:
If you go as a Ltd driver (when clearly it isn’t the case that you are a proper Ltd Company), you need to make sure that your rate of pay covers sick pay, holiday pay, pension and that if you don’t get work, it covers being stood down.In April HMRC are revising the rules about drivers having Lts Co status.
And finally and somewhat sanctimoniously, the big idea about having a Ltd company is that you can then pay yourself dividends and save yourself a wodge in tax. Just my opinion, but do that and you lose the right to whine about anything to do with public services because it’s everyone trying to avoid paying tax that reduces the money available and yes yours is a teeny weeny amount compared to Amazon and all the others who pay diddly squat but that doesn’t mean to say that th elittle man on the street shouldn’t cough up. I didn’t pay myself dividends and I ran a proper Ltd company.
In a bad mood BTW having spent an hour on the phone to British Gas FFS.
This will be a stupid question but I have to ask (so I brace myself for the tirade of abuse) how do I work those benefits out based on an hourly rate offered of say £15 ph
albion:
If you go as a Ltd driver (when clearly it isn’t the case that you are a proper Ltd Company), you need to make sure that your rate of pay covers sick pay, holiday pay, pension and that if you don’t get work, it covers being stood down.In April HMRC are revising the rules about drivers having Lts Co status.
And finally and somewhat sanctimoniously, the big idea about having a Ltd company is that you can then pay yourself dividends and save yourself a wodge in tax. Just my opinion, but do that and you lose the right to whine about anything to do with public services because it’s everyone trying to avoid paying tax that reduces the money available and yes yours is a teeny weeny amount compared to Amazon and all the others who pay diddly squat but that doesn’t mean to say that th elittle man on the street shouldn’t cough up. I didn’t pay myself dividends and I ran a proper Ltd company.
In a bad mood BTW having spent an hour on the phone to British Gas FFS.
Absolutey spot on. In this life if you want something you have to pay for it.
Kynszon:
This will be a stupid question but I have to ask (so I brace myself for the tirade of abuse) how do I work those benefits out based on an hourly rate offered of say £15 ph
This is a simplistic answer and does not take into account any allowances that can be claimed nor running costs of a Ltd Company, it is merely focussing on working out what an equivalent hourly rate would be between Ltd and PAYE before all of that is taken into account.
Basically holiday pay works out as 10.7% of the hourly rate. Employers workplace pension contribution is 3%. Employers NI contribution is 11% of anything above £138 a week but for simplicity we’ll call it 11%.
So 10.7%+3%+11%=24.7%. That is what percentage of your hourly rate is an additional cost to an employer to employ someone so for example if the PAYE rate is £10/hr you’d need to be earning £12.47 self employed to be on the same money. If you want to work it backwards from the Ltd rate to work out what the PAYE equivalent would be you take the Ltd Rate, divide by 124…7 and multiply the result by 100. So for £15 Ltd rate it would be:
£15/124.7= 0.1202
0.1202x100=£12.02.
£15/hr limited is equivalent to roughly £12.02 PAYE.
Now onto things you lose being Limited. First and foremost are all employment rights including the right to be paid on time or at all and if they don’t pay you you have to go through civil court to get the money. You do not get employers contributions to a pension, you don’t get holiday pay. One of the important ones you don’t get is sick pay, something brought home to me. I work for an agency, 2 weeks ago I was admitted for emergency spinal surgery and will be off work a minimum 8 weeks, could be 12. The first week I was off the agency paid me a week’s holiday pay because although I’d not accrued it the length of the sick note would mean I’d earned another week. After that I get £95 SSP. If I were Ltd I’d get nothing, nada, zip so over that 8 weeks I’d be £1100 worse off than I’m going to be. Also if you don’t have a proper terms of business written up with terms to limit your liability if you have an accident, damage a load or do something like take the wrong trailer to the other end of the country you can find yourself being charged for damages and losses you cause your client.
Sorry kynszon, wasnt having a go honest, it’s the system that’s wrong.
I’d just look for another PAYE job especially considering the impending changes in April.
Conor:
Kynszon:
This will be a stupid question but I have to ask (so I brace myself for the tirade of abuse) how do I work those benefits out based on an hourly rate offered of say £15 phThis is a simplistic answer and does not take into account any allowances that can be claimed nor running costs of a Ltd Company, it is merely focussing on working out what an equivalent hourly rate would be between Ltd and PAYE before all of that is taken into account.
Basically holiday pay works out as 10.7% of the hourly rate. Employers workplace pension contribution is 3%. Employers NI contribution is 11% of anything above £138 a week but for simplicity we’ll call it 11%.
So 10.7%+3%+11%=24.7%. That is what percentage of your hourly rate is an additional cost to an employer to employ someone so for example if the PAYE rate is £10/hr you’d need to be earning £12.47 self employed to be on the same money. If you want to work it backwards from the Ltd rate to work out what the PAYE equivalent would be you take the Ltd Rate, divide by 124…7 and multiply the result by 100. So for £15 Ltd rate it would be:
£15/124.7= 0.1202
0.1202x100=£12.02.£15/hr limited is equivalent to roughly £12.02 PAYE.
Now onto things you lose being Limited. First and foremost are all employment rights including the right to be paid on time or at all and if they don’t pay you you have to go through civil court to get the money. You do not get employers contributions to a pension, you don’t get holiday pay. One of the important ones you don’t get is sick pay, something brought home to me. I work for an agency, 2 weeks ago I was admitted for emergency spinal surgery and will be off work a minimum 8 weeks, could be 12. The first week I was off the agency paid me a week’s holiday pay because although I’d not accrued it the length of the sick note would mean I’d earned another week. After that I get £95 SSP. If I were Ltd I’d get nothing, nada, zip so over that 8 weeks I’d be £1100 worse off than I’m going to be. Also if you don’t have a proper terms of business written up with terms to limit your liability if you have an accident, damage a load or do something like take the wrong trailer to the other end of the country you can find yourself being charged for damages and losses you cause your client.
A sensible company could arrange insurance for this eventuality.
Conor:
Kynszon:
This will be a stupid question but I have to ask (so I brace myself for the tirade of abuse) how do I work those benefits out based on an hourly rate offered of say £15 phThis is a simplistic answer and does not take into account any allowances that can be claimed nor running costs of a Ltd Company, it is merely focussing on working out what an equivalent hourly rate would be between Ltd and PAYE before all of that is taken into account.
Basically holiday pay works out as 10.7% of the hourly rate. Employers workplace pension contribution is 3%. Employers NI contribution is 11% of anything above £138 a week but for simplicity we’ll call it 11%.
So 10.7%+3%+11%=24.7%. That is what percentage of your hourly rate is an additional cost to an employer to employ someone so for example if the PAYE rate is £10/hr you’d need to be earning £12.47 self employed to be on the same money. If you want to work it backwards from the Ltd rate to work out what the PAYE equivalent would be you take the Ltd Rate, divide by 124…7 and multiply the result by 100. So for £15 Ltd rate it would be:
£15/124.7= 0.1202
0.1202x100=£12.02.£15/hr limited is equivalent to roughly £12.02 PAYE.
Now onto things you lose being Limited. First and foremost are all employment rights including the right to be paid on time or at all and if they don’t pay you you have to go through civil court to get the money. You do not get employers contributions to a pension, you don’t get holiday pay. One of the important ones you don’t get is sick pay, something brought home to me. I work for an agency, 2 weeks ago I was admitted for emergency spinal surgery and will be off work a minimum 8 weeks, could be 12. The first week I was off the agency paid me a week’s holiday pay because although I’d not accrued it the length of the sick note would mean I’d earned another week. After that I get £95 SSP. If I were Ltd I’d get nothing, nada, zip so over that 8 weeks I’d be £1100 worse off than I’m going to be. Also if you don’t have a proper terms of business written up with terms to limit your liability if you have an accident, damage a load or do something like take the wrong trailer to the other end of the country you can find yourself being charged for damages and losses you cause your client.
This is excellent thank you very much
I looked into going LTD a while back. The agencies I was doing work for only paid £1 per hour more so wasn’t worth it.
When going LTD there’s a lot of benefits but also drawbacks, some have already been mentoned like holiday and sick pay - You can be sure an agency will worm out of paying you sick pay if they can help it with some creative accounting of their own
If you’re organised and good with keeping receipts and follow your accountant’s instructions, you can do well. You can claim back mileage at 45 pence per mile for the first 10K miles and a lowered rate for every mile beyond 10K you do. You will want to use your personal vehicle as running a car on business draws large amounts of tax.
You can also claim back a portion of utilities on your own home spent running your company and other business expenses - How you interpret that is up to yo - For example some take potential clients out to be wined and dined etc
You will need a good accountant to explain how to pay yourself the most tax efficiently from your company.
You will also need liability insurance but that is in the £x00 usually - You can also look into sacrificial companies under a parent company, should you want insurance or be concerned with losing any assets the company holds. (Think Russian dolls)
You can start up your own company for around £120 from memory plus a business account at any bank of your choice. An accountant can set this up for you but obviously charge for that.
I figured a decent chartered accountant would be around the £1200/Year mark, including filing your end of year taxes for the company etc.
Most importantly, you will need your accountant to explain how to keep yourself outside of IR35 regulations - Basically having multiple customers (agencies etc) throughout the financial year among other small items like the wearing or not wearing of a uniform etc.
You will also need to figure out the VAT side of things too - Again agencies will try and worm their way out of paying your company that too.
The accountant I approached had a simple template where if you gave them your income and tax figures on PAYE, they would give you a comparison on LTD rates to show how you would fare free of charge.
It should be noted: Going from PAYE to LTD can affect your credit rating and chances of getting loans and mortgages for the first 6 months.
There are supposedly new rules coming in for the next financial year but those rules will depend on who is in Number 10 at the time and how small business friendly they are.
Hyh:
I looked into going LTD a while back. The agencies I was doing work for only paid £1 per hour more so wasn’t worth it.When going LTD there’s a lot of benefits but also drawbacks, some have already been mentoned like holiday and sick pay - You can be sure an agency will worm out of paying you sick pay if they can help it with some creative accounting of their own
If you’re organised and good with keeping receipts and follow your accountant’s instructions, you can do well. You can claim back mileage at 45 pence per mile for the first 10K miles and a lowered rate for every mile beyond 10K you do. You will want to use your personal vehicle as running a car on business draws large amounts of tax.
You can also claim back a portion of utilities on your own home spent running your company and other business expenses - How you interpret that is up to yo - For example some take potential clients out to be wined and dined etc
Bear in mind that there’s a big difference between legitimate expenses and fabricated ones. The taxman is unlikely to accept that an agency HGV driver found it necessary to wine and dine whilst hammering out a “business” deal.
You can fabricate expenses until the cows come home. The question in the end is always whether a tax investigation occurs - if it doesn’t, then you can claim for the expense of the moon on a stick without anybody telling you different, and if it does occur then you’re going to have a significant bill to pay which could mean a new mortgage.
You will need a good accountant to explain how to pay yourself the most tax efficiently from your company.
You will also need liability insurance but that is in the £x00 usually - You can also look into sacrificial companies under a parent company, should you want insurance or be concerned with losing any assets the company holds. (Think Russian dolls)
You can start up your own company for around £120 from memory plus a business account at any bank of your choice. An accountant can set this up for you but obviously charge for that.I figured a decent chartered accountant would be around the £1200/Year mark, including filing your end of year taxes for the company etc.
Most importantly, you will need your accountant to explain how to keep yourself outside of IR35 regulations - Basically having multiple customers (agencies etc) throughout the financial year among other small items like the wearing or not wearing of a uniform etc.
You will also need to figure out the VAT side of things too - Again agencies will try and worm their way out of paying your company that too.
The accountant I approached had a simple template where if you gave them your income and tax figures on PAYE, they would give you a comparison on LTD rates to show how you would fare free of charge.
It should be noted: Going from PAYE to LTD can affect your credit rating and chances of getting loans and mortgages for the first 6 months.
There are supposedly new rules coming in for the next financial year but those rules will depend on who is in Number 10 at the time and how small business friendly they are.
“Small business” 
You mean how friendly they are to tax evaders?
One of the biggest things to bear in mind with Ltd is simply all the hassle involved. Are you being paid for the time and effort of keeping receipts? Paid for the time and effort of dealing with an accountant and researching tax rules?
If you outsource all the hassles back to the agency, who print your invoices for you etc., then you only impugn the very notion that you’re running a legitimate business.
I always quote an old rule of thumb which is that if you’re (genuinely) working for yourself, you should be charging 3 times (300%) the hourly rate of an employee.
If you’re charging some ridiculous fraction, like 10% over the employed rate, then you’re just shafting yourself, and even a tax fiddle won’t convert a 10% premium into 300%.
A lot of fellas used to fiddle because they were dodging the CSA, or they’re massively understating their income (or overstating their hours for a given income) in order to claim benefits, but the CSA is not something that applies to most, and the benefit rules have been significantly tightened so that going forward that is unlikely to be an advantage.
albion:
If you go as a Ltd driver (when clearly it isn’t the case that you are a proper Ltd Company), you need to make sure that your rate of pay covers sick pay, holiday pay, pension and that if you don’t get work, it covers being stood down.In April HMRC are revising the rules about drivers having Lts Co status.
And finally and somewhat sanctimoniously, the big idea about having a Ltd company is that you can then pay yourself dividends and save yourself a wodge in tax. Just my opinion, but do that and you lose the right to whine about anything to do with public services because it’s everyone trying to avoid paying tax that reduces the money available and yes yours is a teeny weeny amount compared to Amazon and all the others who pay diddly squat but that doesn’t mean to say that th elittle man on the street shouldn’t cough up. I didn’t pay myself dividends and I ran a proper Ltd company.
In a bad mood BTW having spent an hour on the phone to British Gas FFS.
You pay corporation tax at 19% on dividends so I can’t see why you lose a right to whine about public services
Rjan:
Bear in mind that there’s a big difference between legitimate expenses and fabricated ones. The taxman is unlikely to accept that an agency HGV driver found it necessary to wine and dine whilst hammering out a “business” deal.You can fabricate expenses until the cows come home. The question in the end is always whether a tax investigation occurs - if it doesn’t, then you can claim for the expense of the moon on a stick without anybody telling you different, and if it does occur then you’re going to have a significant bill to pay which could mean a new mortgage.
Apologies if I inferred use of fabricated expenses, I didn’t mean it to be read that way. All expenses would have to be interpreted as legitimate. Depending on how you ran the company, you could legitimately incur many types of expenses, including wining and dining potentially depending on what sort of work you were looking for.
For example (And only as an example) if you were doing 90% agency work with an agency and spending the other 10% of time picking up odd jobs here and there, for example moving a track car from point A to point B, perhaps even hiring a suitable vehicle to carry out this job, then meeting with the client over a drink to discuss the finer details is perfectly legitimate and could be seen by some as the wining and dining.
The above example would likely go towards keeping you outside of IR35 regs and so you could claim your mileage expenses, utilities etc.
If you ran the company doing 100% agency work with only 1 agency, then yes you are likely to fall within IR35 regs and you could be seen as being an employee without the protections afforded to one and then HMRC might go looking deeper into you.
Rjan:
“Small business”
You mean how friendly they are to tax evaders?One of the biggest things to bear in mind with Ltd is simply all the hassle involved. Are you being paid for the time and effort of keeping receipts? Paid for the time and effort of dealing with an accountant and researching tax rules?
If you outsource all the hassles back to the agency, who print your invoices for you etc., then you only impugn the very notion that you’re running a legitimate business.
I always quote an old rule of thumb which is that if you’re (genuinely) working for yourself, you should be charging 3 times (300%) the hourly rate of an employee.
If you’re charging some ridiculous fraction, like 10% over the employed rate, then you’re just shafting yourself, and even a tax fiddle won’t convert a 10% premium into 300%.
A lot of fellas used to fiddle because they were dodging the CSA, or they’re massively understating their income (or overstating their hours for a given income) in order to claim benefits, but the CSA is not something that applies to most, and the benefit rules have been significantly tightened so that going forward that is unlikely to be an advantage.
If you don’t like the term “Small Business” Do you have a preference ?
There is a big difference between tax evasion and tax efficiency - Typically time in front of a judge and a big fine
Ofcourse there is no issue if you feel you aren’t paying enough tax and wish to pay more, but don’t force that on others who are already paying enough in the eyes of HMRC rules
Depending on the sector, such as engineering, that 300% rule isn’t a million miles out. For logistics, especially drivers that rule might not be so realistic sadly. I do agree there needs to be much more than a 10% markup to make being a Ltd Company work and you do need to run the numbers yourself to make sure it does work out in your favour.
How a company director chooses to charge for his time for the running of the company is between him, his accountant and the director as an employee - I’m not sure why any agency would be involved with that.
Above all else, find a decent Chartered Accountant to guide you as it can be easy to come unstuck and incur fines - The Chartered bit really does seem to make a difference when it comes to HMRC investigations, or lack of if a Chartered Accountant has signed off on the numbers for you.
Sand Fisher:
A sensible company could arrange insurance for this eventuality.
Why would they spend money on insurance to cover a ■■■■ up by someone who they’re paying for a service, that’s the responsibility of the service provider depending on their terms of business. If you have a gas fitter doing a service on your boiler or a garage working on your car and something goes wrong do you expect them to have insurance to cover it or do you take out a policy yourself? You expect them to have insurance to cover it.
Hyh:
If you’re organised and good with keeping receipts and follow your accountant’s instructions, you can do well. You can claim back mileage at 45 pence per mile for the first 10K miles and a lowered rate for every mile beyond 10K you do.
Is wrong since changes were made. If you are travelling from home to your first client of the day and it is what is considered by HMRC to be a commute to work distance it is classed as commuting and not claimable. Likewise the journey from the last client back to your home.
It should be noted: Going from PAYE to LTD can affect your credit rating and chances of getting loans and mortgages for the first 6 months.
2-3 years actually as most lenders want to see at least 2 years accounts. Also remember that all these expenses you claim to reduce your tax means the profit you are earning on paper is lower which will lower the amount you can borrow or the mortgage you can apply for because if you’ve got £35k income but are claiming £10k of expenses then on paper your profit, and therefore income, is actually only £25k regardless of how much of that £10k of expenses was actually money you’d paid out.
Conor:
Hyh:
If you’re organised and good with keeping receipts and follow your accountant’s instructions, you can do well. You can claim back mileage at 45 pence per mile for the first 10K miles and a lowered rate for every mile beyond 10K you do.Is wrong since changes were made. If you are travelling from home to your first client of the day and it is what is considered by HMRC to be a commute to work distance it is classed as commuting and not claimable. Likewise the journey from the last client back to your home.
If you are PAYE, what you say is correct and if you label your home as your home,then you are correct in regards to Ltd Company. However if you label your home as something else, there is a way to be able to claim that mileage - As I’ve mentioned numerous times in this thread, a good accountant will be able to explain this further in detail
Conor:
Hyh:
It should be noted: Going from PAYE to LTD can affect your credit rating and chances of getting loans and mortgages for the first 6 months.2-3 years actually as most lenders want to see at least 2 years accounts. Also remember that all these expenses you claim to reduce your tax means the profit you are earning on paper is lower which will lower the amount you can borrow or the mortgage you can apply for because if you’ve got £35k income but are claiming £10k of expenses then on paper your profit, and therefore income, is actually only £25k regardless of how much of that £10k of expenses was actually money you’d paid out.
Typically most high street lenders require 2-3 years but there are specialist mortgage brokers out there that cater to Ltd Company/Self Employed etc where monthly incomes etc can vary and they typically require 6 months minimum. The rates can obviously be different to high street lenders too, sometimes better, sometimes worse but you are not necessarily tied to a rigid 2-3 year time frame.
Overdrafts, Loans and Credit Cards and even car financing is a different kettle of fish altogether and can be trickier
Hyh:
If you don’t like the term “Small Business” Do you have a preference ?
It’s not that I don’t like the term, I’m just expressing derision that putting your agency pay through a Ltd company makes you a small businessman - or any kind of businessman.
Hyh:
Conor:
Is wrong since changes were made. If you are travelling from home to your first client of the day and it is what is considered by HMRC to be a commute to work distance it is classed as commuting and not claimable. Likewise the journey from the last client back to your home.If you are PAYE, what you say is correct and if you label your home as your home,then you are correct in regards to Ltd Company. However if you label your home as something else, there is a way to be able to claim that mileage - As I’ve mentioned numerous times in this thread, a good accountant will be able to explain this further in detail
Nope. If you label your home as your office or whatever you’ll still not be able to claim. HMRC have tightened up massively on spurious mileage claims for journeys which are nothing more than normal commuting.
From the horses mouth: gov.uk/hmrc-internal-manual … l/eim32055
Ordinary commuting includes travel that is substantially ordinary commuting, see EIM32300. The case of Kirkwood v Evans (74TC481) confirms that travel between home and a permanent workplace is ordinary commuting even where home is also a workplace.
And…
gov.uk/hmrc-internal-manual … l/eim32300
Section 338(2) ITEPA 2003
Sometimes an employee may travel to a temporary workplace without that journey being significantly different from his or her ordinary commuting journey. A journey that is for practical purposes substantially the same as the employee’s ordinary commuting journey is treated as if it were also ordinary commuting. Therefore, no deduction is allowed for the journey, see EIM32055.
This is intended as a common sense rule that applies where the journey between home and a temporary workplace is broadly the same as the employee’s ordinary commuting journey. In particular, it will deny relief where employees or employers seek to turn an ordinary commuting journey into a business journey to try to get a tax deduction.
In short you’re wrong.