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Self Employed
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My son has been for an interview for a commercial vehicle spray painter he is pretty sure he will get it he has been doing this type of work since leaving school now aged 26 The guy at the company would want to employ him on a self employed basis on a slightly larger hourly rate. Unfortunately neither I nor my son knows anything about it .The guy who interviewed him said he would be much better off Tax etc. I know he won,t get paid hols and have to pay his own National Insurance any help and advice will be greatly appreciated
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There are some financial advantages to being self-employed - your son would pay less National Insurance in total, and there is more scope for claiming expenses (such as the cost of travelling to work).
This must be weighed against the possible financial disadvantages of not receiving paid holidays, sick pay or redundancy compensation. Your son would have none of the protection offered by Employment Law as regards disciplinary procedure, unfair dismissal etc. He would also not have the guarantee of income, so he would need to draw up an agreement with the company stating the terms on which he offeres his services to them.
Being self-employed requires keeping records of all income and expenditure, to produce a statement of income to go with the annual tax return. It also requires the discipline to keep aside a proportion of income to pay a tax bill.
Employers have to pay 12.8% National Insurance contributions on top of an employees salary, and provide all the employee rights referred to above, so you imagine why it suits the company to have someone free-lance. You can also imagine that HMRC are very keen to stop this particular area of tax and NIC avoidance - if your son is working for one company solely, and is an employee in everything but name, then HMRC might decide that he is in fact an employee. They would normall go after the company for unpaid tax and national insurance, but it can be an unpleasant experience.
Finally, your son would need to check the insurance position - would he be covered by the company or would he have to provide his own. If he accidently damaged a vehicle, or was injured at work, it could be disastrous if he is not insured.
If I sound a little negative about this, then that is because in my experience it is the employer that has evrything to gain from these arrangements.
I would advise that your son asks a few more questions from the comapny before he accepts this.
This must be weighed against the possible financial disadvantages of not receiving paid holidays, sick pay or redundancy compensation. Your son would have none of the protection offered by Employment Law as regards disciplinary procedure, unfair dismissal etc. He would also not have the guarantee of income, so he would need to draw up an agreement with the company stating the terms on which he offeres his services to them.
Being self-employed requires keeping records of all income and expenditure, to produce a statement of income to go with the annual tax return. It also requires the discipline to keep aside a proportion of income to pay a tax bill.
Employers have to pay 12.8% National Insurance contributions on top of an employees salary, and provide all the employee rights referred to above, so you imagine why it suits the company to have someone free-lance. You can also imagine that HMRC are very keen to stop this particular area of tax and NIC avoidance - if your son is working for one company solely, and is an employee in everything but name, then HMRC might decide that he is in fact an employee. They would normall go after the company for unpaid tax and national insurance, but it can be an unpleasant experience.
Finally, your son would need to check the insurance position - would he be covered by the company or would he have to provide his own. If he accidently damaged a vehicle, or was injured at work, it could be disastrous if he is not insured.
If I sound a little negative about this, then that is because in my experience it is the employer that has evrything to gain from these arrangements.
I would advise that your son asks a few more questions from the comapny before he accepts this.
To give you some figures, if your son earned �20000 a year as an employee, he would pay tax of �2982, and NIC of �1628.
Self-employed and earning �20000, he would pay tax also of �2982, and total NIC of �1296. He could also claim tax relief on any expenses he incurred - I imagine the main one would be the cost of travel to work - so he could deduct 22% of these expenses from his tax bill.
AS mentioned above however, there are many other factors to consider.
Self-employed and earning �20000, he would pay tax also of �2982, and total NIC of �1296. He could also claim tax relief on any expenses he incurred - I imagine the main one would be the cost of travel to work - so he could deduct 22% of these expenses from his tax bill.
AS mentioned above however, there are many other factors to consider.
Hmmm......these days it's really not possible to work like this - or if you do it's the employer that is leaving themselves open to paying all the tax and NI contributions (both the company's and the employees).
To be truly regarded as self employed your son would need to provide his own equipment (which sounds unlikely in this situation), decide what hours to work to suit himself and provide alternative staff when he wasn't available to work. He would also probably have to show that he was working for a number of companies, not just one. There are many other criteria that HM Revenue & Customs use to define a self employed worker. It's something they've been tightening up on over the last few years so beware.
I really don't think he would be self employed in this situation. Also, by default, he would acquire all the rights of an employee too.
I'm not too sure that I'd want to work for an organisation that was trying 'pull a fast one' like this. They, and he, will get caught out.
Sorry if it's not what you wanted to hear but that's the situation these days.
To be truly regarded as self employed your son would need to provide his own equipment (which sounds unlikely in this situation), decide what hours to work to suit himself and provide alternative staff when he wasn't available to work. He would also probably have to show that he was working for a number of companies, not just one. There are many other criteria that HM Revenue & Customs use to define a self employed worker. It's something they've been tightening up on over the last few years so beware.
I really don't think he would be self employed in this situation. Also, by default, he would acquire all the rights of an employee too.
I'm not too sure that I'd want to work for an organisation that was trying 'pull a fast one' like this. They, and he, will get caught out.
Sorry if it's not what you wanted to hear but that's the situation these days.
It's highly unlikely that the Inland Revenue would accept that he was self-employed unless he fulfilled the criteria they set down. I.s, he should be able to work or not work as he pleases, nominate someone else to do the work if he can't, provide his own tools, be able to choose where he works. This arrangement works only for the company in that they won't pay holiday or sick pay. He should check it out with ACAS. If he's not happy that the arrangement is above board I would not advise him to take the offer up.
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