Temping and national insurance, being self-employed?

[bingocaller88]

Hi,

I was a contractor but a temping agency offered me work which I'm happy to take.. especially in the light of recent IR35 developments

The contract says I'm self-employed but the agency would be paying Employer's NI, and deducting Class 1 Employee's NI and tax from my payslip.

Apparently it is normal that temps are self-employed.

But do I have to pay class 2 National Insurance as well?
And can I claim tax relief on expenses (even though the agency won't reimburse them)?

Thanks

[BrilloPad]

If you pay class I then no need to pay class II. Sounds like not self employed!

class II if you are self employed : then you pay class IV on top.

If you have no job but still want to make contributions then it is class III.

[pmeswani]

Hi,

I was a contractor but a temping agency offered me work which I'm happy to take.. especially in the light of recent IR35 developments

The contract says I'm self-employed but the agency would be paying Employer's NI, and deducting Class 1 Employee's NI and tax from my payslip.

Apparently it is normal that temps are self-employed.

But do I have to pay class 2 National Insurance as well?
And can I claim tax relief on expenses (even though the agency won't reimburse them)?

Thanks

I'm guessing that you will be giving them your P45? If so, you will be their employee (so to speak) for the purposes of tax. If you have a Ltd company, you can ask if you can receive the total income and deduct the tax via your Ltd company. If this is not an option, I would recommend turning down the role.

[ratewhore]

If you pay class I then no need to pay class II. Sounds like not self employed!

class II if you are self employed : then you pay class IV on top.

If you have no job but still want to make contributions then it is class III.

Lucky for us it's so simple...

[bingocaller88]

Thanks for your comments

I'm guessing that you will be giving them your P45? If so, you will be their employee (so to speak) for the purposes of tax. If you have a Ltd company, you can ask if you can receive the total income and deduct the tax via your Ltd company. If this is not an option, I would recommend turning down the role.

Yes they want my P45.

The Ltd co option is available, but the contract would be heavily inside IR35. Therefore I reckon the temp route is better because they will pay the Employer's NI.

The other problem is that they decided that the quoted day rate INCLUDES VAT if thru a Ltd Co. As a temp I'd get the quoted day rate before tax/NI.

[pmeswani]

Thanks for your comments


Yes they want my P45.

The Ltd co option is available, but the contract would be heavily inside IR35. Therefore I reckon the temp route is better because they will pay the Employer's NI.

The other problem is that they decided that the quoted day rate INCLUDES VAT if thru a Ltd Co. As a temp I'd get the quoted day rate before tax/NI.

If you went through the agency, you would lose 20%. If you went through your own Limited company, you would lose 15% at source for VAT, and if you are using the flat rate VAT scheme, you can claim back 1.5% (+ 1% in the first year), therefore only losing no more than 13.5% (12.5% in the first year). You would be at least 6.5% better off. And with paying yourself via a limited company, you can pay yourself via PAYE in the region of £450 and claim the rest via dividends. The £450 amount doesn't attract any N.I. or Income Tax.

Unfortunately, I don't know enough about your contract (i.e. rate and length) and going through an agency may be the best solution for you. The day rate you have been offered is not the true rate in that case. It will be the total amount - 15% (regardless of whether you are on the flat rate or not).

[NotAllThere]

...

The other problem is that they decided that the quoted day rate INCLUDES VAT if thru a Ltd Co. As a temp I'd get the quoted day rate before tax/NI.

At which point, you turn around and say - no it doesn't. The ONLY reason they'd say this is to make their margin bigger. Going ltd should result in less admin for them, and therefore be a cheaper option. B2B VAT (except with banks) is cost neutral.

[pmeswani]

At which point, you turn around and say - no it doesn't. The ONLY reason they'd say this is to make their margin bigger. Going ltd should result in less admin for them, and therefore be a cheaper option. B2B VAT (except with banks) is cost neutral.

This thought had crossed my mind, but decided to give the benefit of doubt to the OP. I have never come across an agent that said that VAT is included in the daily / hourly rate. I was hoping this would have been the first.

[bingocaller88]

Well, despite the paperwork saying otherwise, it turned out that VAT wasn't included, so that worked quite well for the other people there who were through their own companies ...

Anyway I went through PAYE, and I wonder if anyone can comment on claiming tax relief on expenses? The agency wouldn't pay expenses but I did incur accommodation and travel expenses and worked at two different sites...

[Not So Wise]

Temps are now are now basically employee's, so normal employee rules on allowances apply (also afaik rules on holiday pay, sick pay, maternity pay so forth)

As for further info about all this, really wrong place to ask, this is a contractor site, not a employee/temp site