Working as a "Contractor"

[Tally]

I've just seen an advert for a job I'd really like to do. It's very part time with flexible hours, so would fit well around my existing job or if I get a new job. But they say they do not pay your tax or NI and you would be working as a "contractor" and be responsible for sorting all that out yourself. Just wondered if anyone knows anything about this kind of stuff???

 

I have looked on the internet and can't find out what being a "contractor" actually means. Is it the same as being self-employed?

 

Would it be very complicated, considering I have another job where I pay tax via PAYE and NI straight out of my wages before I receive it? Might it be simpler (or even possible) to have my employer pay me my gross pay and do it all via a tax return together?

 

I have applied anyway, I can always withdraw if I decide it's too much hassle.

[KezT]

It's quite simple. Contractor does man the sam as self employed.

 

At the end of each financial year you wil have to complete a self assessment form (online is easyiest). you'll get a P60 from your employer which gives all the info you need for that bit, then you put in gross earning from self employed work (add all your invoices/payslips together) and then you get to deduct all your expences such as travel to work, clothes for work, food while at work, preartion for work...... if it's very part time, you'll probably end up quids in

 

However, contractor's do not have any of the legal protection of employees - no sick, holiday, materity pay, no guarenteed working hours, no redundancy provision, no protection aganst dismisal..... Are you REALLY going to be a contrator, or wil you actually be employed? the usual definition revolves aound a variety of things such as - do you choose who to work for, when, and how to complete the job, or are you old what to do and when to do it? Could you send someone else to do the job if you can't be bothered fo a day/week/month? do you provide your own tools/training? If ou decide o terminate your contract, could anyone else with imilar skills wander in to finish it, or do you need toknow the workings of that particular firm/location?

 

 

Ifyou think you are actually going to be employed, it is better (IMO) o get a proer employment contract and al the benefits & protetion it affords.

[Tally]

OK, it sounds like it would be fairly simple then

 

The job is working for a website, handling questions and problems via email, for hourly pay. They don't specify what hours you do, they just ask you to respond within 2 days to all emails, so you need to check in at least alternate days. The amount of work depends on the number of emails, and can be up to 2 hours per day. It would all be done from home on my own computer.

 

I do know about there being no protection and things like sick pay. I'm not too worried about that because I can get by on what I'm earning at the moment. This would just be some extra money.

[Kathryn]

Lots of useful information on the directgov site about employment status, self employment and paying tax/NI.

 

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_4015975

 

You have to be a bit careful about a second job as I think they take more off you in NI so you have to work out if it's financially viable. Not sure about this though - other people here know more about this stuff than I do.

 

Your local Citizen's Advice Bureau can give you good impartial advice about employment and tax issues so it may be worth discussing it with them before taking the plunge.

 

Good luck if you do decide to go for it!

 

K x

[Tally]

That was the main website I was looking at and it just confused me. I hadn't thought of CAB though.

 

However, I did find on the direct.gov that you can fill in a special form to resolve the problem of overpaying NI if you have 2 jobs.

 

It sounds like it's all quite simple really, but I'll go to the CAB if they offer me the job just to make sure.

[GaryS]

I've worked as a contractor for many years and also employed myself which is slightly more tax efficient but more hassle. I always found it much easier to tax and NI myself upon payment transferring 10% over tax rate into a separate bank account which I never, ever drew from except to pay annual tax after completing return and receiving demand. This does over estimate the actual amounts required but better this way than trying to find the extra you've already spent, better to have the windfall! Kez's right, make sure you keep a good record of your extra expenses (broadband, mobile etc.), I used to simply throw all receipts in a monthly expanding file, totalling at the end of each month.

 

It almost goes without saying that internet contracting is an crowded ocean populated with some very vicious sharks; never part with anything. Try and create a separate email/accounting system and don't use your own bank account for anything.