80% retirement

1. 100% uplift in usually more than enough. 50% is about "par".

1. Makes no difference. NIC2 applies anyway (unless you are granted exception), and NIC4 is based on full tax-year.

Your big problem is whether you would qualify (in HMRC's view) as self employed - and at first sight I very much doubt it. Sounds much more like a zero hours contract, and this would not remove the liability from your employer for holidays, SSP, Class 1 NIC etc.

"Martin" wrote

How much holidays is the employer liable for on a "zero hours contract"?

based upon the hours actually worked

tim

If you want to keep it simple, you might be better off just to use an umbrella company.

For a small commision they will supply a pay-as-you-go tax efficient accountancy service.

They will invoice your employer for your work done, calculate and process whichever deductions are due and then pay you the net value of your earnings.

"tim...." wrote

What if the contract specifies payment "per job task" rather than "per hour" - and hours aren't recorded ?

then (assuming the employee were mined to complain) such a blatant attempt to deny the employee his rightful holiday would be squashed by the courts

tim

"tim...." wrote

I'm not suggesting that the employer is attempting to deny the employee their holiday entitlement. I just wondered how that entitlement would be determined, without a set hourly rate and hours worked... Do you know how the courts would determine the entitlement?

I told you, on the basis of the actual hours worked.

Not recording this information doesn't mean that it isn't know (by somebody)

tim

Isn't this whole sub-dicussion a red herring? Surely there is no holiday entitlement at all. The bottom line is that the ex-employer wishes to re-engage the ex-employee on a new basis, namely that of a contract for services as opposed to a contract of employment, in other words the ex-employee will become self-employed. We may assume for the purpose of this discussion that the ex-employee is willing to enter into such an arrangement.

Only an employment contract would carry entitlement for holidays, sick pay, maternity leave, etc, but in the case of self-employment all these things are irrelevant.

Now enter the tax man. Rules for taxation of self-employment differ from those of employment. Usually a self-employed person will pay less tax (sum of income tax and NI) than an employed person per tax free pound in his pocket, and for this reason the tax man is keen to spot sham arrangements where on paper there is a service contract but in practice the arrangement is indistinguishable from an employment. For example the "contractor" may do all his work on "client" premises at times determined by the client, and indeed he may only have the one client. In such cases the tax man will "deem" there to be a contract of employment and will tax the two parties as if there were.

But this does not change the *real* contract from service to employment, the deeming is for tax purposes only. Is that not so?

OP here. Yes that's right. Basically there are some things that need doing and it would be up to me when I do them. The contract would be for a fixed term.

I thought NIC was weekly based so I'll try calculate whether it does in fact make any difference how I pace the work - all in one go or spread over several months.

NIC is paid at a weekly rate but it needs to be paid whether you are physically working or not as long as you are registered self-employed. Just because you do not work a given day, week or month, that does not mean you cease to be self-employed - in fact that is the usual pattern of self-employment for many.

So, you don't ring up the tax man and say "I am not working Tuesday or at all the following week so I will not be self-employed those days, so I will therefore not be paying NIC for those days.", although it might be fun to try it, just to hear their response. Let us know how you get on if you do! :-)

I thought Class 2 is payable all the time you're classed self employed but Class 4 depend on actual weekly earnings.

Ignore that! Think I understand now....

One of the other poster thought that the nature of the work would forbid that and we moved on to "employment" rules.

tim

Um, no. It will be effective for all employment law

tim

It depends on annual earnings.

HMRC's position is that the nature of the contract is a matter of fact, not their discretion. Also, if employers could arbitrarily declare someone to be on a contract for services, they could get round the law that caught out Baroness Scotland by declaring everyone who couldn't prove their right to work in the UK to be self employed.

But therein lies a contradiction. What you have said sounds as though it intends to imply that the proposition that the nature of the contract is a matter of fact is logically incompatible with any discretion being involved. But that is not the case.

The contract (taking what is explicitly written down together with everything implicit in the way it is operated) is characterised by a number of features. HMRC will look at a selection of these features and use them as evidence to help them "discover" the fact of whether the nature of the contract is more likely to fit the model of an employer/employee, client/provider, or customer/trader relationship.

There is much scope for discretion in how they select the features and how they draw their conclusions.

HMRC's conclusions are no more binding on the other party that yours are.

If the individual doesn't accept HMRC's interpretation then HMRC have to go to court to get a judge to decide.

They don't actually have a very good record on this.

tim