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Binners - I agree you have been shafted on support thru covid. Did you see my question about your laptop thio - 100% claimed against tax or only part as you use it outside of work? I did try once being slf employed - hated it
Cheddar - its a part of the reason I took the job and a part of the reason I accepted a lower salery. My "gold plated" pension is £500 a month
Superann is nothing to do with this really
Superann is nothing to do with this really
why did you include it to make yourself look hard done by then? Plus it is, cause you are also using a tax loop hole as mentioned above.
100% claimed against tax or only part as you use it outside of work?
I can claim back the VAT I paid on it.
Do you realise how unbelievably tactless and offensive you’re coming across as to those of us who’ve had the year from hell, with no end and not a penny of government support in sight? People in my position have taken their own lives in despair. I’ve been one of the luckiest ones and I know and appreciate that
Can I take this opportunity to personally thank the many people off here who commissioned work off me. God knows where me and my family would be without that. It’s kept us afloat when most of my industry has ceased to function and we have been completely abandoned by the government
£220 in superannuation £430 in tax, 180 in NI.
Tax/NI figures just don't fly. (£430 tax =~ £290 NI)
Pension contributions are clearly not a tax.
TJ I’m willing to send you my payslip. You will be very surprised at the amount of tax contractors pay.
All you would need to do is to apologise to people like binners and myself who believe in paying our tax.
If yo are not claiming every little thing possible I am suprised - everyone I know does.
I know Binners is a decent sort and would not unduly fiddle - sorry dude I don't know yo but I will take your word on it so if apologies are in order then i am happy to do so
I think many of you would be suprised how much tax and NI PAYE folk pay.
It would appear my question touched a nerve which wasn't my intention, so I apologise for that. We had contractors at work (project managers) who were not prepared to go PAYE and I was wondering why they would do that.
Yip, 3 months with zero earnings earlier in the year, and 4 months currently with seriously hampered earnings. And zero help. Still had to chuck a wad to HMRC the other week.
Apologies then Binners. Not intended to be offensive
Tax/NI figures just don’t fly.
Read directly from a payslip as above I think many of you that are not paye would be suprised how much tax and NI we pay
I think many of you would be suprised how much tax and NI PAYE folk pay.
How many ****ing times?
I wouldn’t be surprised because I pay EXACTLY THE SAME!
You pay the full NI binners not the class whatever tiny amount?
Read directly from a payslip as above I think many of you that are not paye would be suprised how much tax and NI we pay
I'm PAYE, but moreover, I can use a calculator.
Superannuation is just not a tax. It is the equivalent of the contributions the self-employed (or those employed by their own service company) have to make to their DC pension fund. And bear in mind that those contributions are not matched by any equivalent actual or quasi (in the case of a DB pension) contributions from their employer. That doesn't mean the employed are axiomatically "better off" than the self-employed, simply that the self-employed need to bear that additional cost in mind when deciding what they need to charge their clients. And ultimately whether being self-employed is the right choice for them.
I have simply no concept of how someone generating a self-employed income equivalent to yours can possibly be paying 10% of the tax you are paying, other than via fraud. The difference between NIC for the employed and self-employed is not huge, being 12% vs 9%, unless your mate is already making NIC payments from another job.
I ask because thats what one of my self employed mates does. He drives for work as a freelancer. But he claimed for 2 cars and a motorcycle to be offset against tax plus his lockup and other stuff with at best only peripheral relationships to his work
Surely that's fraud? Why haven't you reported him to HMRC for tax evasion?
You pay the full NI binners not the class whatever tiny amount?
Yes, he does, it's been explained elsewhere hence his anomalous status that means he gets **** all for furlough.
I have simply no concept of how someone generating a self-employed income equivalent to yours can possibly be paying 10% of the tax you are paying, other than via fraud.
It helps if you start from a position of thinking you pay about double as much tax for your salary as you ought to.
Ta for that Squirrelking - its utter shite how self employed have been dealt with thru this - you have no argument from me. and again - If I have clumsily upset people then I apologise
I have simply no concept of how someone generating a self-employed income equivalent to yours can possibly be paying 10% of the tax you are paying, other than via fraud.
Creative accounting / tax avoidence / creative accountant
It helps if you start from a position of thinking you pay about double as much tax for your salary as you ought to.
If thats a dig at me I READ THE NUMBERS DIRECTLY OFF A PAYSLIP
Small point of order, but the NHS pension is subject to the same 1.07 million limit as all other pensions, not 2 million as claimed above.
https://www.bma.org.uk/pay-and-contracts/pensions/tax/nhs-pension-lifetime-allowance
“Binners – lets take your laptop. did you claim it 100% against tax? Is it only used for paid work?“
Are you also saying that the hundreds of thousands of NHS staff who have mobiles provided for them never make personal calls on them?
TJ I thought you would know the tax rates anyhow, do you not have to pay tax on earnings from being a landlord?
TJagain; are thinking about self-employed/contractors who operate as directors of limited companies and then pay themselves a minuscule salary (below the tax threshold), plus one for their partner/husband/wife then claim dividends?
My brother in law does this. My sister is an “employee”. He earns about £100k as a CAD contractor but they pay a tiny amount of tax etc. My knob of a sister even claims child benefits for their kids, which she could (should) opt out of.
My wife is self employed. Does everything decently and fairly like binners. She couldn’t work because of COVID (she didn’t get it!) and she’s received virtually no government support.
I’m a bog standard employee who kept working fortunately, so we’ve been so lucky compared to many these past 12 months.
Mrs TJ does that ( pays the tax on the rental)
There are plenty of people who avoid tax, self employed and employed, but to assume everyone is at it is baseless.
I’m self employed, and pay everything that I should, my accountant is straight down the middle. I could claim for more possibly but those things would be tenuous so I don’t. I know people who do and I have little time for them.
I’d never encourage anyone to be self employed. I generally have one bad debt a year. This year it was about 2,500. A couple of years ago I lost £11,000 and the worst a few years before that £25,000. I’m lucky that I have survived those but I’ve had to work bloody hard to get past it.
If thats a dig at me I READ THE NUMBERS DIRECTLY OFF A PAYSLIP
Sure, but they don't add up.
£2350 gross.
£12500 / 12 personal allowance.
Taxable salary: 2350-(12500/12) = 1308.33 (Ignoring superannuation, which would reduce the taxable amount).
20% of that: £261.67
tjagain
Full Member
Mrs TJ does that
nice wee loop hole that. 😆
so many misunderstandings about how hourly paid contracts get paid I think is the main problem here.
People can work on a contract and work PAYE. Or through an umbrella company PAYE (waste of time as far as I am concerned, unless you do regular short contracts and want to show continuity of employment for a mortgage etc.) or work through a personal services company (ltd)
It's those working through a ltd company who defeintly pay less tax, if they don't why are they all trying hard to argue against IR35 decisions eh? 10% minimum less income most say if they go PAYE.
Its especially relevant when you get above the 40% income - vs corporation tax/dividends..
Even when taking into account accountancy fees, anyone on 600 per day would take home about 15k more limited than PAYE - just check any online calculator and that is being tight with business expenses.
Aidy - I just went and looked at another payslip - that onbe was a year when i got emergency taxed for a a year
another later payslip when I got my tax code sorted is in line with your calculations!
trust me to pick up a payslip which was not correct on tax rates! 🙂
Reading through the thread, the main issue as I see it is that as a self employed person you are very much left to fend for yourself, leading to the mercenary mindset mentioned above.
The tax savings are really pretty minimal unless you are really up there paying yourself £50K + dividends. That's simply not reality for the vast majority of SE people.
Perks? How about sickpay for a start?
TJ, lets say you have a cardiac arrest tomorrow, brought about by perusing a dodgy tax return.
It's nasty, you are off work for three months, and then back to work on light duties for a further three months. How much money do you take home over that period?
Call up an insurance company and enquire about getting insured to that level as a SE person. Please report back on your findings.....
As a slight diversion, I sometimes wonder who does best out of the system over a lifetime of work, discounting the top few percent of trough snufflers.
I did work for a chap recently, ex navy air fleet commander. Pay tax on your large salary for 25 or so years, retire early fifties, draw a mahoosive pension for potentially 40 years.
I think he's doing better over a lifetime than any SE person saving a few percent on NI contributions.
To put the last year into perspective of what life has been like for the self-employed for the last 12 months:
The government keeps trotting out the figure that it has ‘put its arms around’ 1.6 million self-employed people.
The trouble is that there are 5.2 million self-employed in this country
You do the maths. That’s how many people have been cut adrift without a penny of government help as their incomes went into freefall. Those people, with the odd exception, will have paid all their taxes in exactly the same way any employed person would.
In March last year Rishi Sunak made a conscious decision that we were acceptable collateral damage
So we can do without the accusations of being freeloading tax-dodging fraudsters, thanks very much
I have apologised for the slur Binbins
But you have to understand that the government has been able to throw the self-employed to the wolves because of the baseless myths that you’re perpetuating in this thread
They’re all tax-dodgers aren’t they? So why should they get any government support?
Well, no. We’re not tax-dodgers. We pay exactly the same as you, but we’re entitled to nothing. Not a penny of government support. No furlough schemes for us. We’re on our own
Bedmaker - in the NHS I would get full pay
In a previous job in the private sector SSP only
NHS terms and conditions are worth about 20 - 25% of salary compared to private sector. But then we are paid a lot less in the public sector.
@stevemuzzy, last two contracts I had we only had the option of umbrella PAYE, well the other option was to keep looking for work elsewhere.
Umbrella is a horrible option though as I have a sneaky suspicion that one of the “tax” payments I had to make went to the Umbrella Company. Called Employer Statutory Costs, £300 a week. But if
I work I have to pay it. (They have explained it but I’m not convinced it all goes to the taxman)
when you’re at work, have you paid for the laptop you’re working on, the software licenses it’s running? Are you paying to heat the building you’re in? Did you buy the chair you’re sat on? The desk you’re leaning on?
All of this, for most of the last year, yes.
last two contracts I had we only had the option of umbrella PAYE, well the other option was to keep looking for work elsewhere.
Its the standard default in a lot of industries
Yeah agreed binners. My last two
Contracts were from 2016 to 2020 so not sure term gig economy. Working for large
Insurance companies.
Self employed video/photographer here
Sole trader, not LTD
Quite large costs of running business
Very few invoices this year
Also made a loss last year (different circumstances)
PAYE tesco part time (will be about 15k 20-21) will earn me about 1/2 what I expect to make by ye21. And let me tell you this. It's cushy. You show up to your job, do your job and go home. And get paid for it on time, every single time. as a freelancer I'm half considering quitting being freelance and going on cushy PAYE for the rest of my life. It'll definitely help me get [approved for a] a mortgage too. And I won't spend an hour a day worrying about money, I'll know it's hitting my bank account one friday every month for the rest of my life. And that tesco are matching my pension to 7.5%.
I don't fiddle anything, I had everything to accountant and they look at what operating has cost me, and set it against tax. Just like the owner of all your PAYE's companies are doing with all the equipment they have you working with. The premises you go to work on. The Teams subscription you use but don't pay for yourself. The £500/year adobe subscription you use but don't pay for yourself. The £0000+ insurance you probably don't even realise is held against you, that you don't pay for yourself. The marketing that your company does to generate more profit to keep your PAYE hitting your bank account every month, that you don't do yourself. Etc etc etc etc etc etc etc etc etc
I know several self-employed who have had support from the government, but then they paid themselves a reasonably wage, and didn't rely on dividends and manipulating profits.
I know my brother-in-law admits he wouldn't be eligible for help, as his accountant had always advised him to take dividends due to the reduced tax cost, however his business hasn't really been affected by things.
Yet there are millions who will have done the same, and now had no support from the government due to furlough/support payments being based on PAYE (or profit in the case of self-employed).
The whole dividend tax savings are certainly no where near as big as they used to be, but they do still provide a tax saving. There are a lot of business owners who see it as their right to avoid paying as much tax as possible, and have now found out that maybe wasn't the best idea.
If you have set yourself up as a company director, you aren't self-employed.
If you have set yourself up as a company director, you aren’t self-employed.
It is a common misconception though...
Yet there are millions who will have done the same, and now had no support from the government due to furlough/support payments being based on PAYE (or profit in the case of self-employed).
Millions of the self-employed are PAYE freelancers, so it’s just as easy to see how much tax they’ve paid as it is someone who is an employee, as they’ll have paid their tax at the same rate
All of these people are completely excluded from government help despite their earnings and tax payments being just as easily accessible as any employee. They have enjoyed no tax advantages or savings yet are entitled to nothing
This is a deliberate decision by government with little or no basis for doing so. Certainly not the flannel they give about not being able to calculate peoples earning. That’s just bollocks.
But as someone more cynical pointed out, half-joking:
“It’s mainly the creative industries, isn’t it? You’re all bloody lefties, you all vote Labour and you’re all remainers”
There’s probably a lot of truth in that
@TJ you pay hardly any tax, you best not be using the public services that the rest of us pay for.
Self employed, paying similar levels of tax as when I was employed, obviously also have more costs... Was not covered by furlough scheme.
There is a massive amount of conflation of issues here. The employed / self employed pay the same tax on the same income. There is a difference in NI rates though in particular employers NI which one way or other is a cost for an employee as effectively it reduces the pot available to pay the employee. That’s one of the reasons the self employed person might be paid more for the same work (but note doesn’t get the same benefits so self employed have to make own provision for some circumstances like sickness/pension etc).
The real “unfairness” (depending on your POV) is the Ltd company outside IR35 where artificially low salary is paid to the entrepreneur/director (and usually artificially high salary to spouse / children) and this otherwise taxable PAYE amount replaced by dividends. If the “market salary” were paid for the work done then there wouldn’t be much of a problem here either as tax would be identical (though again differences in regimes for expenses / NI + extra scope for taking the piss with expense claims - depending on the ethics of the individuals concerned).
That’s where I would expect the axe to fall - a higher tax rate on dividends from “controlled companies” and possibly retain the current position for “portfolio” dividends. A closer alignment of tax/NI rules wouldn’t go amiss either but there is a basis for different NI rates between categories of worker. Self employed should have lower NI ... as they need to make extra provision for sickness etc) so some of their tax savings are illusory.
Self employed musician here. Always declared the proper amount.....without getting into the morals etc of not declaring the correct amount, given the state of the property market in the last 20 years, how the **** do you get a mortgage if you're declaring hardly any profit?!
Obviously being a musician isn't particularly lucrative these days, so I'm part time at a supermarket. Regular wage every month, sick pay, staff discount, HR department.....I'm on barely above minimum wage yet feel like I've been handed a golden ticket! If it weren't for the fact that I absolutely LOVE being a musician I'd just sack it off for the security and simplicity of being 'employed'.