Low Pay Britain, Dispatches, Channel 4

[Snugglybear]

Did anyone watch this last night?

Now available online http://www.channel4.com/programmes/dispatches/on-demand/60547-001

Nothing that hasn't been mentioned on here*, but then this is a niche forum and Dispatches is on a terrestrial TV channel, so it might reach a few more people.

*JobCentre staff getting people off JSA as "self employed" so they go ahead and earn £250 in 8 months, firms hiring people through umbrella companies so the worker pays employer's and employee's NI, zero hours contracts, firms keeping workers under £153 a week so that said firms don't pay employers' NI, agencies paying less than NMW then claiming workers were "apprentices" which comes as news to said workers who had only induction training, etc.

[workingpoor]

Will catch it on demand later.

Yes the Umbrella company scam is everywhere i got told by an agency when i questioned why i couldnt go PAYE that i wouldnt be getting employed anywhere in my industry unless i went self employed through an umbrella co.

I wont entertain it personally.

I got made redundant with 1000 other colleagues from a shipyard which was shut down by the Government to buy votes. Virtually all the work in whats left of the shipbuilding industry is through 1 or 2 specific agencies and they all want you to go Umbrella company so you pay 2 lots of NI

yours & the employers out of your own pocket.

Its a disgrace.

I've not worked for almost 1 year now and have supported myself from my savings.

But like the Murphy's..........I'm not bitter.

Edited January 20, 2015 by workingpoor

[TheCountOfNowhere]

But like the Murphy's..........I'm not bitter.

Like boddingtons....you f**king should be.

[whitemice]

I got made redundant with 1000 other colleagues from a shipyard which was shut down by the Government to buy votes.

How does shutting down a shipyard buy anyone votes?

[TheCountOfNowhere]

How does shutting down a shipyard buy anyone votes?

They all get a nice redundancy package so can by a BTL.

They then become employers, part of the 1%-ers and are rich in no time.

Such clever people will vote tory, see.

q.e.d.

[workingpoor]

How does shutting down a shipyard buy anyone votes?

The scottish referendum.

Our work on the Navys new carriers was taken from the south coast and relocated to glasgow

as well as a new MOD order for 4 offshore patrol vessels which was our usual

bread and butter work.

"Better not vote for independence or you'll lose your shipyards"

http://www.dailymail.co.uk/news/article-2489374/English-shipyard-axed-appease-Scottish-voters-ahead-independence-referendum-Hammond-admits-frigates-contract-stripped-voters-choose-leave-UK.html

]

Edited January 20, 2015 by workingpoor

[Samboy]

The scottish referendum.

Our work on the Navys new carriers was taken from the south coast and relocated to glasgow

as well as a new MOD order for 4 offshore patrol vessels which was our usual

bread and butter work.

"Better not vote for independence or you'll lose your shipyards"

http://www.dailymail.co.uk/news/article-2489374/English-shipyard-axed-appease-Scottish-voters-ahead-independence-referendum-Hammond-admits-frigates-contract-stripped-voters-choose-leave-UK.html

]

The working class English really are nothing more than scum to play games with in the eyes of the LIBLABCON ruling class.

I hope you will be happy to see the Labour party wiped out in May's election, small victories and all that.

[mikthe20]

I got made redundant with 1000 other colleagues from a shipyard which was shut down by the Government to buy votes. Virtually all the work in whats left of the shipbuilding industry is through 1 or 2 specific agencies and they all want you to go Umbrella company so you pay 2 lots of NI

yours & the employers out of your own pocket.

Its a disgrace.

I've not worked for almost 1 year now and have supported myself from my savings.

But like the Murphy's..........I'm not bitter.

Mate, you're in danger of spiting your face. If you go self-employed you don't have to pay NI at all. Set up a Ltd company (forget the umbrella companies, it's not difficult to run it yourself and pay an accountant £200 a year to do returns). Then pay yourself the minimum in PAYE each month to qualify for full NI contribution (easy using HMRC's online PAYE - they really are quite efficient) - this is £663 per month this FY. You don't actually pay any NI, but do qualify fully. Any excess, pay yourself tax-free through dividends up to 40% tax threshold (or pay yourself the 0% rate £10k salary and then dividends). Any excess from that beyond £1 putting you into the higher rate tax rate, stick in pension contribution direct from your company, which will be topped up 20% when it's paid in, and you can claim additional 20% with annual tax return. You'll also not pay corporation tax on it, so that's another 20% saved in tax, effectively making net 60% on top of the actual cash pension contribution IYSWIM (I know it's not actually 60% but still big contribution). Directors can contribute to pension in excess of their salary too, unlike others.

Lots of other things too - 45p per mile for business mileage is very generous, especially considering current fuel prices. It's all kosher (get financial advice and all that).

Here's another one: Register for VAT and join the Small Business Flat Rate scheme, designed to encourage small businesses - max turnover something like £270k IIRC. Downside is you can't claim VAT back on purchases, so best for service/consultancy business. Charge your business clients 20% VAT as usual (they won't care, they claim it back anyway). You only pay VAT to HMRC at the rate for your type of business. This could be as low as 9% IIRC, let's call it 10%. So you effectively you only pay half the VAT and get an extra 10% from your clients at no additional cost to them. That extra 10% makes a big impact on your gross margins/bottom line.

Got accumulated profits built up in the business after many years? Great, sell or close the business and pay only 10% tax (entrepreneur's relief) rather than 40%+ as income tax (will have paid 20% corporation tax on any profits though of course).

Wish I'd left salaried PAYE employment years ago - much higher net income possible for the same amount of work, or just work less for the same net income.

ETA: Bit about taking salary of £10k at 0% income tax instead of £663 per month, although some NI due on the former. There are currently discounts on NI for new business/employees so might not be any due in first couple of years IIRC.

Edited January 20, 2015 by mikthe20

[chronyx]

I went PAYE two weeks ago. God dammit. Wish I'd seen the above two years ago.

[mikthe20]

I went PAYE two weeks ago. God dammit. Wish I'd seen the above two years ago.

Sorry mate If it's any consolation it took me years to work out and I probably could have saved a good 6-figure sum over the years.

[chronyx]

Sorry mate If it's any consolation it took me years to work out and I probably could have saved a good 6-figure sum over the years.

No need to apologise mate. Win some lose some. I'll be glad of the constant reliable wage.

[mikthe20]

No need to apologise mate. Win some lose some. I'll be glad of the constant reliable wage.

I know what you mean by that!!!

[workingpoor]

Thanks mikthe20

i shall read and digest all that good info!

[mikthe20]

Thanks mikthe20

i shall read and digest all that good info!

No problem WP. All the best.

Edit: BTW, it was redundancy that lead me down this path although as above you need to cope with "voids" of erratic pay or no pay between jobs, but sounds like you've got that taken care of already. Cheers.

Edited January 20, 2015 by mikthe20

[Snugglybear]

Mate, you're in danger of spiting your face. If you go self-employed you don't have to pay NI at all. Set up a Ltd company (forget the umbrella companies, it's not difficult to run it yourself and pay an accountant £200 a year to do returns). Then pay yourself the minimum in PAYE each month to qualify for full NI contribution (easy using HMRC's online PAYE - they really are quite efficient) - this is £663 per month this FY. You don't actually pay any NI, but do qualify fully. Any excess, pay yourself tax-free through dividends up to 40% tax threshold. Any excess from that beyond £1 putting you into the higher rate tax rate, stick in pension contribution direct from your company, which will be topped up 20% when it's paid in, and you can claim additional 20% with annual tax return. You'll also not pay corporation tax on it, so that's another 20% saved in tax, effectively making net 60% on top of the actual cash pension contribution IYSWIM (I know it's not actually 60% but still big contribution). Directors can contribute to pension in excess of their salary too, unlike others.

Lots of other things too - 45p per mile for business mileage is very generous, especially considering current fuel prices. It's all kosher (get financial advice and all that).

Here's another one: Register for VAT and join the Small Business Flat Rate scheme, designed to encourage small businesses - max turnover something like £270k IIRC. Downside is you can't claim VAT back on purchases, so best for service/consultancy business. Charge your business clients 20% VAT as usual (they won't care, they claim it back anyway). You only pay VAT to HMRC at the rate for your type of business. This could be as low as 9% IIRC, let's call it 10%. So you effectively you only pay half the VAT and get an extra 10% from your clients at no additional cost to them. That extra 10% makes a big impact on your gross margins/bottom line.

Got accumulated profits built up in the business after many years? Great, sell or close the business and pay only 10% tax (entrepreneur's relief) rather than 40%+ as income tax (will have paid 20% corporation tax on any profits though of course).

Wish I'd left salaried PAYE employment years ago - much higher net income possible for the same amount of work, or just work less for the same net income.

Of course, going self-employed is only viable if the firm you're actually doing the work for allows it.

According to workers on the Heads of the Valleys road expansion, the construction firm Carillon insisted on contractors being paid through an agency or accountancy company. Its argument was that they couldn't be considered self-employed under HMRC rules as they were "under direct supervision, direction and control".

And obviously it couldn't employ the workers directly, as this would mean having to pay employer's NI and, heaven forfend, the workers having rights.

The Welsh Government has finally stomped on this, after a union compaign and coverage in the media. These particularly workers will now be employed on a PAYE basis by Carillon or its employment agency.

HMRC, BTW, said it would never require the use of an umbrella company or any other intermediary structure.

Edit: clarity

Edited January 20, 2015 by Snugglybear

[long time lurking]

Of course, going self-employed is only viable if the firm you're actually doing the work for allows it.

According to workers on the Heads of the Valleys road expansion, the construction firm Carillon insisted on contractors being paid through an agency or accountancy company. Its argument was that they couldn't be considered self-employed under HMRC rules as they were "under direct supervision, direction and control".

And obviously it couldn't employ the workers directly, as this would mean having to pay employer's NI and, heaven forfend, the workers having rights.

The Welsh Government has finally stomped on this, after a union compaign and coverage in the media. These particularly workers will now be employed on a PAYE basis by Carillon or its employment agency.

HMRC, BTW, said it would never require the use of an umbrella company or any other intermediary structure.

Edit: clarity

It`s the same for just about all the rail contractors and engineering construction industries especially so if the work is done through employment agencies

[jammin35]

As an ex IT contractor, it is fairly clear that HMRC not only doesn't require, but is very against the use of limited companies.

It would much prefer that we all pay full paye and the number of investigations of limited companies that use the tax advantages described in this thread has rocketed in the last 3 years.