29th August 2009, 01:02 PM
Tax is complicated. There are costs to self employment, there are only a limited number of days that can be worked per year. There are complexities about what is and is not proper self employment. But please be realistic.
For example accounts take 1.5 hours per quarter to do.
Bank Charges - for this level of turnover why are you bothering with a business account. In any event say six transactions a month. (Pay In pay out NI petty cash at 50p per transaction ?3 per month) ?36 per year).
Insurance ?300 a year
PPE ?100 a year
Memberships ?200 a year
All these expenses are deducted from your profit. Profit is the difference between income and expenditure. For accommodation therefore (I think as this does not affect me) the cost of the accommodation is an expense and the payment you receive for it is income. In any event the tax situation for accommodation is going to be different for somebody who is self employed to somebody that is not. (David why not check this with the revenue).
I would also note that what is included in the day rate is important is it labour only.
The IFA figures are important as they give a clue as to why people are paid so badly in archaeology. We can debate how many days a self employed person can work a year (I have worked 27 days this month) but lets say it is between 200 to 220 days a year at the IFA charge rate of ?200 per day that gives a turnover of 40-44k to give a wage of 20k a year so that is overheads of 20k-24k. This is also for a specialist not somebody on site so there will be higher overheads for the specialist but not 24k worth.
There is a simple point high overheads mean low wages. Every time there is a demand for more training, more holiday more what ever it means lower wages. Everything has to be paid for.
Chiz says ?you may have to pay tax in advance?. No you don?t as self employed you complete a tax form in January for the previous year and you pay an advance for the next tax year ie the current tax year. So in effect you are always paying in arrears. You also have the benefit on the interest on the tax between the time earned and when the tax is due (the exception being if you have a very good year followed by a bad year when you will pay too much tax and have to reclaim it later).
Peter
For example accounts take 1.5 hours per quarter to do.
Bank Charges - for this level of turnover why are you bothering with a business account. In any event say six transactions a month. (Pay In pay out NI petty cash at 50p per transaction ?3 per month) ?36 per year).
Insurance ?300 a year
PPE ?100 a year
Memberships ?200 a year
All these expenses are deducted from your profit. Profit is the difference between income and expenditure. For accommodation therefore (I think as this does not affect me) the cost of the accommodation is an expense and the payment you receive for it is income. In any event the tax situation for accommodation is going to be different for somebody who is self employed to somebody that is not. (David why not check this with the revenue).
I would also note that what is included in the day rate is important is it labour only.
The IFA figures are important as they give a clue as to why people are paid so badly in archaeology. We can debate how many days a self employed person can work a year (I have worked 27 days this month) but lets say it is between 200 to 220 days a year at the IFA charge rate of ?200 per day that gives a turnover of 40-44k to give a wage of 20k a year so that is overheads of 20k-24k. This is also for a specialist not somebody on site so there will be higher overheads for the specialist but not 24k worth.
There is a simple point high overheads mean low wages. Every time there is a demand for more training, more holiday more what ever it means lower wages. Everything has to be paid for.
Chiz says ?you may have to pay tax in advance?. No you don?t as self employed you complete a tax form in January for the previous year and you pay an advance for the next tax year ie the current tax year. So in effect you are always paying in arrears. You also have the benefit on the interest on the tax between the time earned and when the tax is due (the exception being if you have a very good year followed by a bad year when you will pay too much tax and have to reclaim it later).
Peter