# PAYE vs CIS (self employed)



## banditbarron (Sep 1, 2007)

Hoping you good folks can help me un pickle my brain on this one.

Basically the company i currently work for are offering me to work for them on a sub contractor basis which will most likely use the CIS scheme as we are a plumbing and heating business.

I've spoke to a few people about it and they all seem to say the old saying oh you can claim for everything and be quids in etc etc 

I've read through all the garbage on HMRC website and am struggling to work out which way would benefit me more staying PAYE or going CIS (subby)

I won't be buying any supplies to do my job as i am a heating engineer so all i need is my tools which i already have and any spares will be supplied by my employer as they are now.

I have been offered to either keep my work van that they can say is a 'pool' van or something like that or can get my own van and fuel it, insure it etc.

What i can't work out is say i do that with the van what can i actually claim for? 

Also being vat registered how does that work? do i need to be? is it worth it?

Any help you guys can give is greatly appreciated :thumb::thumb:

Dave


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## bigmc (Mar 22, 2010)

You'll pay less NI as it's only £12.80 per month for self employed. You'll be able to get a decent accountant to pretty much make sure you pay very little or even zero tax.


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## mickl (Dec 21, 2010)

Hi Dave

Are they offering you a substantial increase in your hourly rate to compensate for loss of paid holidays, sickness pay and any other perks you have in your current package?
Remember that it will be easier to lay you off with no obligation on their part with no notice or redundancy, if this happens you will also find it more difficult to get any benefits if needed.
There are also strict guidlines that the IR work to to define wether you are self employed or not, check out the IR website for these.

As for paying zero tax, unless your name is Jimmy Carr, Gary Barlow etc, after being self employed for around 25 years I have yet to work a year and not pay a fair amount in tax, National insurance is paid monthly as per previous thread but you will also pay a percentage on your final profit for the year, ie the amount that is left after deductions for travel costs, tools , protective clothing, accountants fees.

I am not an accountant but a carpenter working for myself so these comments are what I have found in my experience.

I would avoid vat registration if possible as if you start working for private clients it will push up your prices and is another headache. You would probably only need to register if you were supplying materials which would put your turnover over the threshold required to be registered.

Best advice is to check the IR and HMRC websites where there is a wealth of information and also talk to an accountant who will be able to give you best advice.

Good luck

Mick L


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## banditbarron (Sep 1, 2007)

Thanks for the above advice.

I should never work for private clients it will only be for my current employer. So reference the VAT what are the benefits and negatives? 

As for the financial gains i have got to sit and work it out properly and they haven't yet given me an actual figure to work on but said to have a think and if i'm interested we will discuss figures.

But as a rough example i earn say £550 before deductions now per week so pick up around £420 after deductions.

And they are looking at paying me per job I do for them and the figure £25 was mentioned which i know isn't enough to make it a benefit.

Cause say i do 7 jobs a day 5 days a week and £25 per job = £875.

Then take out my tax and costs (van, fuel etc) it will probably work out about the same but as said a figure hasn't been set.

What i want to know is when you say you pay percentage of your final profit. I take it there is a set allowance and every thing you can claim was purchased for business can be deducted from the amount over that allowance?

Also i understand its 20% tax but folks are telling me an accountant will get that reduced? how? as i'm not going to be buying masses of things for the business.

Also any advice on purchasing/leasing a van would be helpful.

Again folks have said lease and others say buy for tax reasons! I don't really understand their reasons?

Dave


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## Wmffra (Oct 30, 2005)

Have a look at the following
http://www.hmrc.gov.uk/paye/employees/start-leave/status.htm

Employers especially in the construction industry prefer the idea of self employed as mentioned in the above posts. Employers don't have the same type of headache with hiring and firing, holiday pay/time off from contracts and especially employer contributions on behalf of each employee.

It's the employers responsibility for determining the status of an employee/self-employed worker.


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## lofty (Jun 19, 2007)

If your labour only and working for only them, then you should be on their books not CIS.
If your turnover is going to be less than £77000 over the next 12 months then you don't need to register for VAT.As for paying no tax when self employed, I should be so lucky,Vat, Class 2 and class 4 national insurance plus income tax is why I eventually went limited.


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## banditbarron (Sep 1, 2007)

lofty said:


> If your labour only and working for only them, then you should be on their books not CIS.
> If your turnover is going to be less than £77000 over the next 12 months then you don't need to register for VAT.As for paying no tax when self employed, I should be so lucky,Vat, Class 2 and class 4 national insurance plus income tax is why I eventually went limited.


Turnover will be well below £77k

I am already on their books as PAYE but they are offering me to go Subby to them. Not sure why if i'm honest but if it can benefit me then i don't mind.

Any one here know why they want me to go as a subby? I am aware they always have cash flow issues due to the massive contracts we have with all the major house builders but the company is financially ok as far as i'm aware and its a family company that i know arent trying to do me over too


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## bigmc (Mar 22, 2010)

They can get rid of you on a whim if you're a subby, hard work if you're cards in.


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## lofty (Jun 19, 2007)

If your a subby then they can give as much or as little work as they see fit,they don't have to pay you holiday pay or sick pay, and can lay you off if they are short of cash or work.Unless they are going to pay you considerably more than you are earning at the moment then I cant see any benefit to you.


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