The changes to the way self employed paid from 6 April 2016 will be felt most by those who are employed directly by umbrella companies. However, those lucky enough to be paid using their own limited companies, such as drivers who use DriverPlus, should not be significantly affected by the changes in tax legislation.
DriverPlus will stay broadly the same, however there will some small modest changes.
Firstly, there will be no structured or fixed amount for you to pay yourself through your PAYE schemes. Instead we recommend that the weekly pay is increased from £155 per week to £205. This will result in the payment of a small amount of NIC, amounting to about £7 per week being payable. This will be deducted from your net pay on a weekly basis. However, the amount you pay yourself is now a matter for yourselves to decide upon. You can choose to remain on the minimum PAYE amount and pay no income tax nor NIC on your salary but you might be subject to taxes at a later date.
Depending on how you choose to get paid, our understanding of the changes is that you’re only going to be £7 per week worse off by a small increase in NIC.
We believe that our model is still the best by a mile, as under the new tax rules, travel and subsistence expenses will be outlawed for all umbrella companies. This will decrease the net pay by about 27% if you are paid via an umbrella company. Whereas drivers who use DriverPlus will see their net pay fall by only 2%. We have looked at all of the proposed changes and now cannot see how we can maintain the current payments structure.
The proposed changes will come into force from 6 April 2016 and between now and then we will be consulting with all of our driver customers, giving each one tailored advice to suit their needs. Anything raised in this email should be communicated to us at first opportunity.
In summary then:
1. Changes in tax rules from 6 April means that DriverPlus requires some minor changes.
2. We no longer have a fixed weekly pay structure, but instead provide a tailored payroll solution, that best suits your needs.
3. The base salary will be increased from £155 per week, to a minimum of £205 per week. This will result in a small amount of NIC being deducted from every drivers salary each week. We estimate that this will be approximately £7 per week.
4. If you choose a higher weekly salary, during our consultation we will advise you of the amount of PAYE and NIC we will be deducting from your weekly pay.
5. The small changes are unfortunately necessary in order to keep DriverPlus competitive in the HGV driver accountancy market.
6. Don’t be alarmed by any of the above points. If you need to discuss any of the points, you can contact us on 01204 573555.