Going Self Employed

[SeánH]

Hi all, hopefully this will be an easy one.

Basically, I've been offered the chance of 4 years of work doing Atex inspections around the country.  I'm currently employed with a tidy firm, I served my time with them and have gradually worked my way up the ladder a little bit.  But this new job will be on a self employed basis with the possibility of being taken on as a PAYE employee at the end of the contract.  The pay difference is quite substantial.  My questions are.

1. How do I go about becoming self employed.
2. Who do I speak to? HMRC?

3. What are the things I need to put in place/watch out for?

I'll be subbing direct so no middle man taking a cut.

Any help would be very appreciated.

Thanks in advance,

Sean

 

[ProDave]

I thought one of the basic definitions of self employed, was you work for multiple customers?  Doesn't this fail that test?

It was 17 years ago I became self employed so I forge the details, and it has probably changed, but it was simple to notify hmrc that you were self employed, which triggers you getting a tax return to complete every year. You also need PL insurance etc.

 

[steptoe]

How substantial is this 'pay rise' ?

Considering you won't be guaranteed 40 hours every week, no sick pay, no holiday pay, etc etc etc.

If you want/need a guaranteed income, then SE is not the path you want to take.

Also, as @ProDave points out, if you are in an exclusive contract with one employer, hmrc will take a lit of interest in you.

SE is now defined as taking a financial risk, so unless you quote jobs on a risk basis (and not an hourly rate) you will not (in hmrcs view) be SE.

If you do want to go down SE route, simply inform hmrc you are SE and they will issue you with a UTR, then get some insurance, public liability, and professional indemnity (if required), which I would think you need to be doing inspections, and make sure you are qualified and competent to be doing the required inspections otherwise your insurance co will simply walk away and leave you with nothing, house and savings gone, and you in the dock trying to justify yourself.

 

[Evans Electric]

When you say you work for a "tidy" firm  ....is that a firm goes round tidying up  or is it the classic South Walian saying   ..As in  "Theres tidy is'nt it"  ?  :innocent

HMRC can get shirty when you're self employed  but only work for one company .

Its based on  "Not taking a financial risk  so you're not SE " 

Beware of the grass being greener and take a look at How Green Was My Valley

 

[binky]

can you live without a guaranteed income?

 

[SeánH]

Thanks for the replies gents.

Forgive me if me using the term self employed is incorrect.  My understanding of the correct definition with regards to tax/employment is mediocre at best.  More reading is needed I think.  With regards to working exclusively for just one company, if both parties are happy, does that make the relationship pretty much an employer/employee? Or am I way off the mark there?

The pay rise is between £9-20 ph which depends on the rate I'd get according to my experience level at performing the inspections.  Been doing it almost 3 years now so don't have bucket loads atm but I'm not green either.  Hours are 50 a week.  Working away with digs/travel paid.  It will be a substantial pay rise whatever rate I get.  Work is guaranteed for 4 years due to heavy investment, but I understand I cant take that as gospel.  

Regards,

Sean.

 

[Murdoch]

Don't forget to factor in loss of pension too..................

 

[phil d]

It doesn't matter if you and the company are happy with you being SE, it's HMRC that count, if they are not happy they'll make your life a misery. As others have said, being SE isn't all rosy, in your earnings you have to factor it covering you for 52 weeks a year. Remember that being SE, you get no holiday or sickness pay, so lets imagine someone says they'll give you say 3K a month and you think well that's good, 36K a year, then they tell you you'll only be working for 9 months a year, then that 3K a month suddenly drops to 2250 a month because you have 12 months in a year. Then there may be holidays, or sickness, even a vehicle, lets be honest, if you have a company vehicle, it's not just the vehicle they pay for. It's Tax, mot, insurance, fuel, maintenance, it all adds up. suppose the van's engine blows?, working for a company, it's their problem. If they haven't got a spare one then you still get paid even if you are sat around doing nothing, if it's your motor and it packs up then if you are not working you ain't earning.

Insurance can be expensive too, your private insurance on your own car may be quite reasonable, start using it for business and it can get hellishly expensive,what sort of mileage will you be doing? will you be going to a set destination,or will you be travelling all over the place? It all affects the price, that's before we get into what you are carrying, start carrying stuff that doesn't belong to you and it's goods in transit insurance as well, don't have this on the policy and god help you if an expensive item belonging to someone else gets damaged or stolen while being transported in your vehicle.

That's just the tip of a very large iceberg, be careful, a bird in the hand is worth 2 in the bush.

A long time ago I was head hunted by an electrical contractors run by a lad I went to school with, I gave my notice in at the firm I was working for, they persuaded me to stay, "we've got work for you for the next 6 month's and there's more coming in, plus you'll be getting a pay rise shortly" A couple of months later I was called into the office, "sorry mate, we didn't get that new contract, you and several others are being finished up on Friday"

so much for all the promises, if I had jumped ship, ok I wouldn't have had as much money as they were promising, but at least I would have still had a job.

 

[SeánH]

Thanks for the info.  

Looks like I have a lot to think about over the weekend. 

Regards,

Sean

 

[user 28595]

Doing the basic maths for PAYG to SE.

PAYG

Rate = 20/hr

Employer pays National Insurance, pension, allowance for holiday / sick etc.

SE

National Insurance: 9%

Pension minimum: 10%

Holiday: 4/52, 8%

Sick: 1%

Total: 28%, not including additional time to manage your business, or personal / professional insurance

Rate = 30/hr

That's more than your proposed extra 9/hr so you have been diddled.

Plus HMRC will treat you as a standard employee so there are no extra deductions.

Sounds to me like the tidy firm want you off their books.

cheers, Paul

 

[Blue Duck]

I'm not enjoying my current employment, It's like swimming in a mix of treacle and dog poo with a 17 plate Peugeot expert tethered to you.

I'm on the look out for other work but PAYE jobs are becoming thinner on the ground, I 've met with a few potential employers and they all want you to work SE which for me doesn't work as I have two young kids and need sick leave holiday pay etc.

I'm seriously considering a massive pay cut and joining a UKPN training programme.

I would like to be SE but when the time is right.