UK Bicycle Courier (Self Employment & PAYE)

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XYZZY
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Feb 16 2008 21:29
UK Bicycle Courier (Self Employment & PAYE)

I am considered by my only employer as self employed. The reality is that I do not meet the Inland Revenue's tests for self employment [1, 2]. My employer is well aware of this.

My employer wants all full time couriers to sign a PAYE contract. I am being offered £2 per week above my current wage, but I'll be hit with a 23% NI and tax whammy.

I am currently able to offset my bike related expenses against tax. This new contract takes little account of the tax offset and still expects me to provide my equipment at my own expense. I am being offered a daily maintenance allowance of £1.75. I am also being offered 20 days paid holiday per year.

Since I do not meet the self employment criteria, I was under the impression that my employer should have been paying my NI and tax. The new contract stipulates that by signing it, I am agreeing that I was previously self employed. This I am unwilling to do.

One solution to this which is beneficial to my employer and me is remaining self employed by forming either a partnership or limited company. My employer will pay no tax and I will continue to pay National Insurance contributions and offset my work expenses against tax.

1 - www.hmrc.gov.uk/employment-status/index.htm
2 - www.hmrc.gov.uk/calcs/esi.htm

Any advice?

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playinghob
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Feb 17 2008 17:54

Employers don't pay a workers tax and National Insurance contributions under PAYE. As a self-employed worker, soletrader, in your case, you have to pay Class 2 contributions, from the date you started as self-employed. I also think you have to notify the Inland Revenue within 3 months of becoming self-employed [ie register as Self-Employed]. If you don't meet their criteria you may well face finacial penalties. On the Income Tax side of things; it is not quite enough to state that you can offset your bike against tax: As I understand it, you get an allowance for work related expenditure, but then you are taxed on your "profits" - which would be your wages after "expenses". You also have to submit Tax returns.

Furthermore, a worker is solely responsible for sorting out their correct tax code as well as the Class of NI contributions. (I got stung around £3,000 in taxes I owed the Inland Revenue - I made a genuine oversight regarding tax codes on two separate incomes - not only did I have to pay it back; I had to negotiate repayment terms [based on my income] and if it wasnt repaid on the specified dates and within a specified period of time I faced a penalty clause. The bastards had me hook, line and sinker.

Your employer obviously classes you as self employed as they abdicate all responsibility for you as a worker. They can also change the structure of the terms of employment - if you choose not to sign up for PAYE they can say bye bye and probably get away with it. Cos I reckon it would not be technically classed as unfair dismissal
I reckon the Tax man has probably been breathing down their necks and they are trying to clean up their own books. For your own part, you need to make sure your "books" are up to date.

I personally think you would be better off PAYE, making sure you also have terms of employment and a contract.[You also get paid holidays and statuatory sick pay] In your present situation I suspect you have none of this, which leaves you as a very vulnerable worker.

The courier business is notoriously bad for workers - p/t, casual, dubious self-employed status etc. - and by my understanding poorly organised. I wonder if other Libcommers work as couriers?

Have you read "Couriers are Revolting- the dispatch industry workers union 1989-1992" - you may find this useful.

I hope my ramblings are slightly useful and hopefully stimulate others to contribute to this thread.

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Jacques Roux
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Feb 17 2008 18:23

The people at http://www.movingtargetzine.com/forum/discussions/ might be able to help, this kinda stuff has come up on there b4 I think.

Also try http://www.londonmessengers.org who I'm pretty sure you can email for advice...

http://libcom.org/library/the-couriers-are-revolting-the-despatch-industry-workers-union-1989-1992

XYZZY
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Feb 17 2008 19:17
playinghob wrote:
Employers don't pay a workers tax and National Insurance contributions under PAYE.

Are you certain that it is not the responsibility of the employer to deduct the employee's tax and NI liabilities under PAYE?

The GMB are taking on CitySprint over the sacking of a self employed bicycle courier:
http://www.movingtargetzine.com/forum/discussion/578/shitty-sprint-get-into-the-xmas-spirit/

playinghob wrote:
As a self-employed worker, soletrader, in your case, you have to pay Class 2 contributions, from the date you started as self-employed.

The point is that I do not meet the criteria for self employment.

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playinghob
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Feb 18 2008 20:22
Quote:
I was under the impression that my employer should have been paying my NI and tax.

Perhaps we got our wires crossed here. If you mean their paying is their deducting it from your wages. Yes it is their responsibility to do it. That is if they employ you as PAYE. But it is your responsibility if you are self employed.

Quote:
The point is that I do not meet the criteria for self employment

So under what terms did you take the job?

XYZZY
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Mar 1 2008 14:39
XYZZY wrote:
The point is that I do not meet the criteria for self employment
playinghob wrote:
So under what terms did you take the job?

This does not matter a whit. Do you think the employer trumps the Inland Revenue when assessing criteria for self employment? If not, then because I am clearly not self employed, it is an offence for my employer not to have paid my NI and tax contributions.

ftony
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Joined: 26-05-04
Mar 3 2008 11:56

er, it does matter. a lot.

your boss is not doing anything legally dodgy by changing you from employed to self-employed, because those two contracts are entirely different legal entities. essentially your boss would be making you redundant and re-hiring you no longer as an employee, but as an independent contractor. that's an important distinction in the eyes of the law. as an employee, you can do PAYE and get tax and NI deducted from your wages, but as self-employed, you will have to do your own taxes because you will, in essence, be a small business owner.

if you want to fight that change, i'd suggest you get a union involved, organise an autonomous work group for direct actions without union backing, or get out of there and find a new boss pronto.

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the button
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Mar 3 2008 12:47
ftony wrote:
but as self-employed, you will have to do your own taxes because you will, in essence, be a small business owner.

Sorry to be nitpicky, but there is a difference between self-employment & owning a small business from a tax/NI point of view.

Another thing to keep in mind about self-employment is that the Class II NI contributions that you pay don't entitle you to anywhere near as many benefits as Class I's (the kind deducted from the wages of employees).

ftony
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Mar 3 2008 14:00
the button wrote:
ftony wrote:
but as self-employed, you will have to do your own taxes because you will, in essence, be a small business owner.

Sorry to be nitpicky, but there is a difference between self-employment & owning a small business from a tax/NI point of view.

Another thing to keep in mind about self-employment is that the Class II NI contributions that you pay don't entitle you to anywhere near as many benefits as Class I's (the kind deducted from the wages of employees).

okay, there is a teeny difference, but what i was meaning is that in the eyes of the law being self employed is more like being a small business than an employee.