Consultancy/freelance work

[Lily]

I've been appproached by a company to do some work with them. They're based in Blackpool and I am going up to visit next week but the work would generally be remote.

They would like me to market their flight simulator but also potentially manage their training school (what I was doing at my old job).

I am chuffed that they approached me via LinkedIn seeing I was available for work. I have known them for a while and like the cut of their jib. I've been asked to quote what it would cost them.

Ideally I would like to be in paid employment. I'm v nervous about lack of healthcare, paying a pension, paying my own tax and NICs. I do self-assessment for extra work that I do mystery shopping but I do very little of that now.

Questions are!
- Would I be able to suggest I work for them on their payroll and quote the salary I was paid at my last job? It wasn't as much as I need, but I think I should prove myself before upping the cost
- Could I suggest a 2/3 month contract?
- If I go down the freelance route how do I figure out how much to charge bearing in mind I'd need to add in tax, pension and NICs? I have no idea about any of this.

Thank you in advance for any help.

[Rebel Pebble]

This is good news!

I'm not an expert in this at all but I don't think you can be both on a contract and be treated as a permanent employee for things like pensions and healthcare. Either you're permanent or you're not.

This might help in terms of explaining the difference between being a freelancer and a contractor.

https://www.contractoradviceuk.net/comp ... eelancing/

Fundamentally both are self employed but one works for many clients at the same time (freelancer) and one works for a single client for a period of time (contractor). Neither are permanent employees for the purposes of benefits, tax etc.

As far as your day rate or any contract fee you quote it should ALWAYS be higher than whatever you would have taken home as an equivalent salary. Both because of what you've identified and because the employer is saving on employee NI, pension contributions and benefits etc.

[Derek Nimmo]

I think what you're talking about is a fixed term contract as opposed to being a contractor or freelancer, is that right? As in, you'd be fully on their payroll, and due all of the same benefits as a permanent employee?

If so, the company may not want to go to the hassle of setting you up on their books for such a short period, but I don't see why you couldn't ask.

The two rates of pay should be very different though, as Rebs says. For a fixed term contract, I'd go for the equivalent of the salary that you want (do not undesell yourself), pro rata'd for however many months the project would be for. For a freelance contract, you should be charging the equivalent of 1.5x your desired salary as a minimum (to make up for the tax hassle and the NI etc that you'd have to pay yourself).

[Derek Nimmo]

Also, if you do accept work as a freelancer / contractor, you can claim things such as travel against your tax (particularly important if they want you in Blackpool at all). You should also ask them to cover all travel costs for you, either as a fixed term employee or contractor.

[Derek Nimmo]

AND no more "proving yourself" nonsense. You've been doing this job for years, and they've approached you as they know your work, there's your proof!

Would a middle aged white man think this way? No he would not

[Rebel Pebble]

I think what you're talking about is a fixed term contract as opposed to being a contractor or freelancer, is that right? As in, you'd be fully on their payroll, and due all of the same benefits as a permanent employee?

Ah, yes. I don't associate 2-3 months with a Fixed Term Contract but, like you say, no harm in asking.

[Teasel]

That sounds exciting Lily. I can't help with your questions but if you need help when your in Blackpool please let me know. I work in the Town Centre and live a few miles outside the town.

[Lily]

Thanks all. Ideally I'd be an employee but I suspect they will want to do freelance initially at least.

I would need to figure out how much to charge. I''ll ask my dad to do the calculations as I will wind up vastly underpaying myself I suspect. Teasel- I definitely will!

[Lily]

My dad wasn't much help so I asked a friend. I am looking at asking:
- zero hours (so they pay NI and tax)
- £200 per day or £25 per hour
- Plus travel, accommodation and subsistence

Does that seem reasonable? I think that works out at about £50k a year, but they would obviously not be paying me all that time and I would need to be putting something away for sick pay, holiday, pension etc. If I had to pay my own tax, etc. I would need to up the cost.

[Rebel Pebble]

I'm not very good at this contractor thing and I know nothing about zero hours contracts so forgive me if I'm confused here.

When you say "they pay the tax" what do you mean? Do you mean it's deducted at source? Because you pay your own tax/NI regardless of when it vanishes. :)) If tax and NI are being deducted at source at PAYE rates then you're classed as an employee and would be entitled to holiday pay surely?

ALSO are you aiming to end up with £200 per day after tax or to have a salary of £200 per day and then tax and NI are taken off? TBH that seems low as a day rate to me for all that you're going to be doing but I'm still thinking as a freelancer.

AND if you are being treated as an employee for Tax and NI purposes (ie they're being deducted at source) then check what the situation is regarding getting your travel and subsistence paid because, for example, if they pay your travel from home to them it could end up being treated as a benefit and attract tax and NI. Whereas if you're properly freelance and your work base is your home address, it's tax deductible.

https://www.gov.uk/expenses-and-benefit ... 0Insurance.

And one last thing is I thought Zero Hours contracts were going to be kicked to the kerb by Labour. Or have they rowed back on that?

[Cosmopolitan]

You have 2 options here Lily,
ftc - fixed term contract - basically you are a member of staff, with an end date. They do paye, NIC, you'll claim travel etc thru their systems, they do all the tax etc.

Contractor. You do everything.

Contractor breaks down into 2 ways of doing it,
1.you set up as a sole trader on HMRC , manage yoir own ACCOUNTS, pay your own tax and NI, do everything yourself.
2.Set up a Ltd company, get an accountant to do your accounts. I wouldn't do this yet.

£200 is not enough as a day rate, it's barely over min wage once you've paid your tax and NI. Do not charge in less than 4 hour increments. Do not be tempted to keep time sheets, all of this is more effort for little savings on their behalf.

[Rebel Pebble]

Oh, another thing. An hourly rate should always be more than just an exact fraction of the day rate just as a half day rate should be more than half a full day rate. This is because if you work, say, 4 hours out of a day, the chance of you being able to fill the other four hours with the same amount of work and pay is very small.

So to me a £200 day rate would mean a £150 half day rate and about a £40 hourly rate

But, again, I may be talking like a freelancer who has to travel to most jobs. TBH I don't do hourly rates even from home.

ETA:

£200 is not enough as a day rate, it's barely over min wage once you've paid your tax and NI. Do not charge in less than 4 hour increments. Do not be tempted to keep time sheets, all of this is more effort for little savings on their behalf.

THIS 100% and Cos has made your options much clearer than I did.

[Cosmopolitan]

I wouldn't even consider offering an hourly rate, that effectively stops you doing any other work during that day.

[H1ppychick]

If you did want to go down the consultancy route, you need to build in holiday allowance and the amount you need to cover any other desired benefits (pensions etc) into your rate. As Derek said, a 50% uplift to the equivalent annual salary is a good place to start,

Therefore to get the rate you'd want, I'd take your target annual salary if you were permanent and had holiday, sick pay and pension, then multiply by 1.5, divide by the number of weeks in the year a permanent person would work (e.g. 46 or 47) after their holiday allowance, then divide by 5, that would get you an approximate benchmark for a day rate.

So if you're targeting e.g. £45k equivalent salary, it would be:

• 45,000 x 1.5 / 47 / 5 = approx £285 per day (£40k equivalent would be c.£255 per day)

I'd be inclined to use 6 weeks as the baseline holiday you'd want to cover, bearing in mind you don't get paid for bank holidays,

• 45,000 x 1.5 / 46 / 5 = approx £295 per day (£40k equivalent is c.£260 per day)

As Cosmo says, I wouldn't offer an hourly rate. You can always play around with a day rate if you need to.

• If you wanted to work a part-day, most employers permit this in their admin/billing (I'd guess a half-day is the most common alternative)

• You might want to tweak the day rate depending on the standard working hours, which could range between 7 and 8 depending on the contract.
  So you could reduce the rate if you want a 7-hour day baked in to the deal

• or if there might be a possibility of some form of compressed hours full time equivalent, e.g. if you were working 5 days in 4 you'd multiply your baseline rate by 1.25

There are more barriers to working as a day rate employee these days and fewer tax benefits but it can still be very lucrative. There are lots of companies out there that can do all the admin for you.

You'd need to bear in mind you may be required to take out insurance covers, e.g professional indemnity or employer liability, so you'd need to cost that out too. I used a company called Qdos for insurances when I was working as a contractor, I didn't use their accounting service but I think it was relatively competitive, you could browse their website to get an idea of the sort of thing you could do.

https://www.qaccounting.com/
https://www.qdoscontractor.com/

[Lily]

Thank you so very much for your replies. This is an absolute minefield to me and I have no idea where to start. I will go for £295 a day and see how I get on. Ideally I want a permanent job but this could work out very well in the short term and I can set up separate accounts for tax, NI and holiday funds. I am very grateful for your help thank you.

[Lily]

Sorry, it's El Stupido again.

Chap from last company has asked me to do some digital work and offered £120 a day. So I would be on payroll, but I figure £120 would be before tax. That's really not very much is it... Judging by the posts previous to this it's less than minimum wage.

The problem is though that I don't have anything else at the moment, so at least that would be better than nothing.

Also he might turn around and say it's all I'm worth.

[lazzbo]

You can't live off that, Lily. And he was a demeaning twat. And other people don't decide your rate as a freelancer.

[Lily]

The problem is I don't have anything else. It's not like I'm fighting off work with a stick! I truly am a beggar at this point and getting some money in would be better than nothing. But not if it actually costs me more than I get in! If it's £120 after tax then that would be alright - as I'll be zero hours and paying tax, NI, etc. as PAYE.

I know I should be demanding hundreds a day but I cannot afford to turn work down. I do think though that if it is before tax it's about £3 an hour and even I know I'm worth more than that! Especially as he doesn't need to pay accommodation anymore. So I guess I'm asking how do I ask that,"can I just check this is after tax etc, as if it isn't it's about £3 an hour and I would get more than that from UC"?

I hate being so timid about asking for money.

[sally maclennane]

How about working out what you want, and simply stating "thanks for getting in touch, my day rate is £xx, please let me know if you want to proceed"

Be factual- women use words like "just" and "check" and it goes against them. This guy is a chancer, don't give him the opportunity to negotiate. I know you're saying you don't have other work but he doesn't know that, and as you said, you don't want to do work that doesn't actually pay.

[Lily]

GAAAH You're so right, I've been wording it almost apologetically. I feel so bad about the whole thing. I'm like a submissive dog. If it's after tax that's doable. So I'll say something like that.