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Replies

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  Paving & Landscaping June 20, 2011 at 7:19pm

   
  

  May I ask, what is the Max amount of time someone can work for whilst self-employed before you have to take them on or is a question of them being paid for other work?
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  Colin@Green Room Gardens June 20, 2011 at 9:20pm

  spot on paul!
  
  Paul @ PPCH Services said:

  I think the best thing would be to contact the inland revenue and get them to give an answer in writeing, this way if thing are ever queried you will be watertight.

   
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  Anthony Toop June 20, 2011 at 11:04pm

  Just been on the HMRC website and found this employment calculator

   

  http://www.hmrc.gov.uk/calcs/esi.htm

   

  according to the results i got, my brother would be classed as an employee!

  that being said, it takes no account of the amount of hours worked which i thought had a large bearing on the issue!
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  Claire Brown June 21, 2011 at 8:48am

  my understanding is that it isn't the amount of hours, but if they are set. - I.e if you say - I want you to work every Monday, then you are asking them to make a commitment to you, and they should be an employee. However if you say, i'd like you to do the equivalent of 8 hours a week, to fit into both our schedules, then they are a contractor as they can say no to when.  In practise Monday might be the best day for both of you, but you could change it to a Friday, or do 3 days one week and then nothing for a couple of weeks.
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  Tim Wettone June 21, 2011 at 10:23am

  The number of hours is irrelevant, I am sorry to say.  What determines employment or self employment status is the manner of the working arrangements between you.  You could have someone work for you for one hour and they could still be treated as employed.

   

  I would tend to agree with the result of HMRC's employment calculator if your brother isn't using any of his own tools or vehicle, does not have his own expertise to bring to the work he is required to do etc etc.

   

  It sounds like you will need to set up a PAYE scheme to handle paying him with tax deducted at source (as he is also self employed and, presumably, his personal allowance is utilised against that income).
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  Anthony Toop June 21, 2011 at 11:58am

  thanks for the reply, the situation as you suggest will be the case for the first 8wks or so and then as more work comes along he will increasingly be doing a larger percentage of the jobs on his own, to fit in with his own flooring work as required.

  So to recap, one day a week working with me initialy, in my van, using my tools, but not neccesarily always under my instruction and then later maybe another full day a week on his own, working to his own schedule, using his own van but tools supplied by me.

  Its not exactly employed or self employed but a varying mix of the two!!...?

  
  Tim Wettone said:

  The number of hours is irrelevant, I am sorry to say.  What determines employment or self employment status is the manner of the working arrangements between you.  You could have someone work for you for one hour and they could still be treated as employed.

   

  I would tend to agree with the result of HMRC's employment calculator if your brother isn't using any of his own tools or vehicle, does not have his own expertise to bring to the work he is required to do etc etc.

   

  It sounds like you will need to set up a PAYE scheme to handle paying him with tax deducted at source (as he is also self employed and, presumably, his personal allowance is utilised against that income).
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  Tim Wettone June 21, 2011 at 12:28pm

  If you can alter the short term arrangements to reflect the fact that he uses his own vehicle, then that may steer you away from employment status. That would seem a better way forward than setting up a PAYE scheme, with all that entails, only to shut it down again a few weeks later.
  
  Anthony Toop said:

  thanks for the reply, the situation as you suggest will be the case for the first 8wks or so and then as more work comes along he will increasingly be doing a larger percentage of the jobs on his own, to fit in with his own flooring work as required.

  So to recap, one day a week working with me initialy, in my van, using my tools, but not neccesarily always under my instruction and then later maybe another full day a week on his own, working to his own schedule, using his own van but tools supplied by me.

  Its not exactly employed or self employed but a varying mix of the two!!...?

  
  Tim Wettone said:

  The number of hours is irrelevant, I am sorry to say.  What determines employment or self employment status is the manner of the working arrangements between you.  You could have someone work for you for one hour and they could still be treated as employed.

   

  I would tend to agree with the result of HMRC's employment calculator if your brother isn't using any of his own tools or vehicle, does not have his own expertise to bring to the work he is required to do etc etc.

   

  It sounds like you will need to set up a PAYE scheme to handle paying him with tax deducted at source (as he is also self employed and, presumably, his personal allowance is utilised against that income).
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  Lloyd Gulley June 21, 2011 at 10:48pm

  Of course HMRC like people to be employed and not self employed because they get 2 lots of national insurance contributions. If you are self employed you just pay your own NIC's but if you employ someone the employer has to pay 11% in employers NIC's as well as the employee paying their own NIC's.

   

  I always see it as a tax on jobs, and a dis incentive to employ people when you are of course trying to do a good thing. Suggest however as Paul says you get it in writing from HMRC so you have a comeback.

   

  Best of luck
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  Tim Wettone June 22, 2011 at 9:27am

  Employers NIC is more than that!  Its now 13.8% for earnings above £136 per week, with employees now paying 12% above £139 per week.  It is a tax on jobs and the only long term comfort used to be that NICs paid by employed people earned a higher state pension.  Now that the government are proprosing flat rate pensions, that advantage will go.  However, they are also looking at merging the tax and NIC systems (good luck on that one) to remove amny of these issues.

   

  As regards getting written confirmation from HMRC, they won't do that. Under self assessment, it is up to you to determine such matters, and then up to them to challenge your conclusion.  The employment calculator referred to above is a useful tool to assist, but you are unlikely to get any more out of HMRC.
  
  Lloyd Gulley said:

  Of course HMRC like people to be employed and not self employed because they get 2 lots of national insurance contributions. If you are self employed you just pay your own NIC's but if you employ someone the employer has to pay 11% in employers NIC's as well as the employee paying their own NIC's.

   

  I always see it as a tax on jobs, and a dis incentive to employ people when you are of course trying to do a good thing. Suggest however as Paul says you get it in writing from HMRC so you have a comeback.

   

  Best of luck
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  Gareth June 22, 2011 at 11:34am

  After using the online employment tools (inconclusive), talking with HMRC (they agreed its not clear cut) and finally interview with local businesslink rep it was suggested that forming a partnership, full or limited was a useful option.

   

  Sounded a bit too complicated initially but once the terms and conditions of a (limited liabilty) paretnership are agreed it could be the best way to "employ" someone.

   

  I havent set it up myself yet so havent worked out all the pros and cons but it looks promising.