from employed to self employed

[amckay]

I'm thinking of going self employed and working for agencies to get broader experience but need to know what to get from hmrc? I know I need a utr number but do I need out else from them? I've already got pli for 2mil.
What percentage of earnings do I deduct for tax and ni? Also holiday pay?
Does anyone know of any GOOD accountants in Manchester?
Thanks

 

[Octopus]

Holiday pay when SE? What's that. Lol

 

[Richard Burns]

Register with HMRC as self employed and they will send you a UTR.
They will then send you bills for class II and class IV (if applicable) NI , your tax assuming you do not go above the income limits (£32k! lots of chance of that!) will be 20% of your profit after personal allowance, that is where you will have to work out what your profit is!

 

[amckay]

What's the difference between utr and cis?

 

[Richard Burns]

UTR is unique tax reference.
This is a means of ensuring that all your tax information is correctly routed through HMRC and assigned to you.

CIS is the Construction Industry scheme
This is a means of HMRC attempting to ensure that sub contractors in construction are not paid cash in hand and still pay tax, so the tax is taken off at a high level directly by the employer before payment to the sub contractor and then at the end of the tax year any excess is repaid. (This is a very approximate statement)
The contractor and sub contractor both need to register with HMRC on the CIS scheme.

 

[amckay]

UTR is unique tax reference.
This is a means of ensuring that all your tax information is correctly routed through HMRC and assigned to you.

CIS is the Construction Industry scheme
This is a means of HMRC attempting to ensure that sub contractors in construction are not paid cash in hand and still pay tax, so the tax is taken off at a high level directly by the employer before payment to the sub contractor and then at the end of the tax year any excess is repaid. (This is a very approximate statement)
The contractor and sub contractor both need to register with HMRC on the CIS scheme.

Ah OK.
Is it possible to have a utr and cis numbers at same time? For eg agency workers who flirt between agency and sub work?

 

[Manutd4life]

CIS is no longer available if you work for agencies. It's all the umberella scheme now and that's a scam. You will be worse off with money.

for holiday pay they take it out your weekly wage then you can ask for it back or ask them not to take it out. You also pay their NI aswell as your own.

I got out just in time.

 

[MisterE]

Take a look at this e-learning course from the HMRC :-
Starting your own business

 

[elliot123]

What is better out of the two then? CIS or UTR?

 

[happydundee]

LTD company is best. Start up one yourself, them you don't have to pay umbrella companies rip off prices. Once that's done, you pay yourself 10k a year, so no tax. Keep up your NI payments though. Any profit is taxed at 20% corporation tax, and you pay yourself the rest as a dividend. I also pay my wife 10k a year as bookkeeper and give her 50% of the company, so she gets a dividend also. This way you avoid the 40% tax, loads of stuff is deductable, like cars, fuel, tools and such like. A good accountant can save you a fortune. Totally legal.

 

[Guest77]

I'm thinking of going self employed and working for agencies to get broader experience but need to know what to get from hmrc? I know I need a utr number but do I need out else from them? I've already got pli for 2mil.
What percentage of earnings do I deduct for tax and ni? Also holiday pay?
Does anyone know of any GOOD accountants in Manchester?
Thanks

As you haven't yet gone self employed I am suprised they allowed a non business or sole trader to get PL insurance, strange that.

 

[Manutd4life]

What is better out of the two then? CIS or UTR?

UTR is your Unique Tax Reference.

CIS is self employment but you do your tax returns yearly (the best option out of the two)

Umberella is self employment but you put expenses in weekly and pay their NI too.

When I was CIS I was getting more a week than the guys on umbrella and then I was able to get a tax return at the end of the tax year.

LTD company is best. Start up one yourself, them you don't have to pay umbrella companies rip off prices. Once that's done, you pay yourself 10k a year, so no tax. Keep up your NI payments though. Any profit is taxed at 20% corporation tax, and you pay yourself the rest as a dividend. I also pay my wife 10k a year as bookkeeper and give her 50% of the company, so she gets a dividend also. This way you avoid the 40% tax, loads of stuff is deductable, like cars, fuel, tools and such like. A good accountant can save you a fortune. Totally legal.

Not all agencies let you invoice them direct, you must go through an umberella company or aka composite company


Also, before you go self employed, get registered with a few agencies so you're already to go when you want to. Don't be scared to decline workfrom them, they will still contact you and you can ring them anytime too. I went from self employed to employed recently and I haven't told the agencies so if I change my mind I am still on their systems, I still get a lot of texts, phone calls and emails for jobs, I just tell them I'm currently working.

 

[happydundee]

I wouldn't deal with an agency if they wouldn't allow invoicing from my company. It is the same as an umbrella company. Maybe they get kickbacks from the umbrella companies. Luckily I don't work for agencies maybe.

 

[Manutd4life]

I wouldn't deal with an agency if they wouldn't allow invoicing from my company. It is the same as an umbrella company. Maybe they get kickbacks from the umbrella companies. Luckily I don't work for agencies maybe.

Im afraid that you wouldn't get much work from agencies then if that's what you rely on.

 

[amckay]

I'm thinking of going self employed and working for agencies to get broader experience but need to know what to get from hmrc? I know I need a utr number but do I need out else from them? I've already got pli for 2mil.
What percentage of earnings do I deduct for tax and ni? Also holiday pay?
Does anyone know of any GOOD accountants in Manchester?
Thanks

As you haven't yet gone self employed I am suprised they allowed a non business or sole trader to get PL insurance, strange that.

Its all about knowing what they want to hear in order to get your own way.
I was as bent as a nine Bob note but just like Norman Stanley Fletcher, I'm going straight! Lol

 

[Guest77]

Its all about knowing what they want to hear in order to get your own way.
I was as bent as a nine Bob note but just like Norman Stanley Fletcher, I'm going straight! Lol

So if you accidently dropped a hammer off a pair of steps and it hit your customer on the head they would pay out then if you were doing a foreigner/ cobble?

 

[amckay]

Its all about knowing what they want to hear in order to get your own way.
I was as bent as a nine Bob note but just like Norman Stanley Fletcher, I'm going straight! Lol

So if you accidently dropped a hammer off a pair of steps and it hit your customer on the head they would pay out then if you were doing a foreigner/ cobble?

No reason why not! The policy is in my name and covers for such work. My argument would be that he hit the hammer lol
Not sure tho, I'll get legit soon!

 

[amckay]

LTD company is best. Start up one yourself, them you don't have to pay umbrella companies rip off prices. Once that's done, you pay yourself 10k a year, so no tax. Keep up your NI payments though. Any profit is taxed at 20% corporation tax, and you pay yourself the rest as a dividend. I also pay my wife 10k a year as bookkeeper and give her 50% of the company, so she gets a dividend also. This way you avoid the 40% tax, loads of stuff is deductable, like cars, fuel, tools and such like. A good accountant can save you a fortune. Totally legal.

So the cost of a new van gets eaten away by my tax bill?
Tell me more my friend!

 

[flyingsausage]

I wouldn't deal with an agency if they wouldn't allow invoicing from my company. It is the same as an umbrella company. Maybe they get kickbacks from the umbrella companies. Luckily I don't work for agencies maybe.

The umbrella companies are mostly owned by the same company that owns the agency,so if an agency says you can only use one umbrella company(their own) you can be sure they are tied up together.