Is this hourly rate too high?

Thank you! Everyone please read all of @Badbadbunny’s posts….who I assume is an accountant or finance advisor and the one on this thread providing detailed up to date information.

self employment or running things through a limited company is not the “gravy train” is may have been 15 years ago.

Most things can be done for free. I.e. some service their own cars, some do their own decorating, their own gardening, their own DIY, their own plumbing, their own window cleaning, wash their own cars, etc. It's up to the person themselves whether they wish to spend their time doing such things or whether they'd rather pay someone else to do it. We all have choices. Just as a self employed person has the choice what to quote potential clients.

Yes you pay those things (except parking and lunch) out of your gross (pre tax) salary. Most people seem to compare their equivalent net hourly rate to that of a self employed person (which also has to cover much more than just tax, pension and NI)

We stopped having a cleaner when the going rate hit £20. London.
Fuck it... I can do it myself for free.

30x 20pph is nearly 32k a year

the other 7 hours spent travelling is fair enough

most people work 37 hours pw for 32k a year plus pay for travel and spend 5 hours traveling to and from

£20 is fair imo

Thank you from a self-employed person. You wrote what I was going to.

As a paid employee I pay tax, NI, pension, travel, parking and lunch. Of course being SE brings further costs and considerations such as no sick pay, holiday, pension top up etc - not debating it for a moment and I agree that you can’t compare the hourly rate of a SE worker to that of an employed one. But let’s not get too carried away here… £25 ph is a lot for a cleaner.

By the way, I’m all for cleaners earning as much as they can get - all power to them along with all the skilled and unskilled workers out there, many of them work harder than office monkeys and do an amazing job. It’s supply and demand, which is why tradespeople should get paid well too.

Re travel, your "normal commute" isn't a tax deductible expense, but it's not for the self employed either, if, say, they have a daily commute from home to their office or workshop. Their travel is only allowable for travel between jobs, just like an employee would be able to claim from their normal workplace to somewhere different, i.e. a different branch or a training course. There's really not much difference! It's just that self employed can often travel to various different clients, but if they were employed and spent the day travelling between their employer's customers, they'd be able to claim it too!

Same with other expenses, as an employee, you CAN claim tax relief on tools, equipment and expenses that you have to incur personally as per your contract of employment. If, say, your contract of employment specifies you have to provide your own laptop, then you can claim the cost of your laptop against your earnings for tax purposes. Likewise the likes of car mechanics who have to provide their own tool kit. For the majority of workers, the employer provides what you need to do your job, so you'd don't have the costs to pay personally, hence why you don't get tax relief.

£23-£25 an hour here, SW

I don’t think it’s unreasonable to be honest. If she’s good, reliable and trustworthy it’s worth the money. My cleaner is worth her weight in gold and saves me a huge amount of time and head space. I can understand though if you’re paid near her hourly rate that you might not feel it’s worth it - if that were the case I’d do it but pay myself the equivalent and use it for a weekend away every so often.

Yes, I wouldn’t pay that. Shop around.

not all of them are tax free expenses and even if she gets tax breaks, still still has to earn the money to cover those costs in the first place (with the exception of taxes owed which are proportionate to her earnings)

and as I said - I’m not looking for any pity! Just wanted to explain why you can not, at all, compare her “hourly rate” to yours as a salaried employee.

you can choose whether you’re willing to pay that or not, but that’s separate to whether she is justified in charging that

£15 seems to be the going rate round here.

Cleaning is generally speaking a low paid job.

People prefer it over eg working in a supermarket as they have control over their own hours. Most independent cleaners I’ve met have gone it alone as they get paid more than via an agency.

If OP’s cleaner can charge £25/h and get customers, all credit to her, but it’s not the norm by any stretch of the imagination.

You're out of date. Dividends are no longer a low tax option. In fact due to recent changes, someone earning average income is now better off being a sole trader and shutting down their limited company. We're doing exactly that for several of our limited company clients and we're setting up new business clients as sole traders or partnerships. A couple of decades ago (thanks to Gordon Brown's idiotic changes), we'd be setting literally every new business up as a limited company. Things have really changed.

Tax-deductible expenses aren't the magic bullet that "pub talk" people would have you believe either. If done legally, there's not that much different between what is allowable as a sole trader compared with an employee, other than expenses an employer would cover than a sole trader would have to pay for himself. It's mostly drunken pub talk bravado where people claim they've put their family holidays and their kid's christmas presents through their business as a tax expense - in reality, just doesn't happen.

This is true but generally only really relevant or worth the extra overhead and admin required for high earners (£80/ hour at least)

I would never be self employed for the reasons you state above. It is a very hard slog when you are getting started and getting started can be anything from 1 to 10 years! I admire people who do it. I was with someone for 10 years in my twenties who was self employed and it was challenging and I knew it would never be for me as I like having the security of a wage and not having to do all you cite. I think some of the views on this thread are ignorant. I dont think £25 is bad at all, and it does obviously depend where you live, I am in the South, I was paying £15 for a cleaner 14 years ago and I am not paying £20 which I dont think has really gone up with cost of living etc. Also those citing minimum wage, regardless of the fact that it is comparing apples to oranges in this scenario, I think NMW is appalling in this country and I have no idea how people survive on it.

But if OP lives in an affluent area, where house prices and rents will be expensive, how is somebody supposed to support themselves and a family on £15 an hour, without working all the hours under the sun or resorting to claiming top up benefits to boost their income? That’s barely above minimum wage, and a self-employed cleaner has costs an employed one doesn’t. Either we think wages for so-called unskilled jobs in the U.K. are too low and should be higher because working people should earn enough to support themselves, or we don’t. If we do, we can’t then also be shocked that people requesting higher wages are expensive.

Whilst there are costs associated with self employment/running a business there are also advantages in terms of tax rate paid compared to someone who is PAYE for the same income.

Some of it legal and some not but there are plenty of self employed people who pay very little tax on income compared to the equivalent PAYE salary. Even more options if you make a limited company (not difficult) and pay yourself dividends.

I wouldn’t pay it but I think it’s reasonable when you take into account petrol, products, HMRC deductions, insurance, holiday pay uplift and self employed pension contributions (own contribution plus extra to make up for an obligatory employer contribution in a regular job). Self employed cleaners enjoy little in the way of job security, as they are often the first expense to be cut in hard times.

You can’t compare your job to hers. Your employer/clients don’t randomly decide they don’t need you when they go on holiday and therefore not pay you. She doesn’t get employer pension contributions. She won’t be working a full 40hr week. She won’t get any redundancy pay or notice period. She won’t get sick or holiday pay.

She has priced herself accordingly and you can look for someone cheaper, but you might not get the same service.

Have you not read the thread. Many people have pointed out the differences between employment and self employment. No honest/sane person would work self employed for the same pay they could get stacking shelves in a supermarket because of all the costs and non chargeable time, and "extras" financed by employers such as sick pay, holiday pay, etc.

But if they are self employed, the amount they charge per hour isn't the same as earning 15/hr

They are independent (as it says in the OP) and minimum wage is £12.21ph from April .

I haven’t read the full thread so someone may have already said this but I find these comparisons quite grating as someone who is also self employed / runs my own business with a proper set up through a limited company.

I’m not a cleaner but if she’s doing it properly she’ll either be running a limited company or set up as a sole trader and both come with thousands of pounds of costs.

As a salaried employee, here’s a sample of the costs you don’t incur (or have to fund yourself out of your net pay):

• taxes - personal, company, NI
• accountancy - again both personal and business/company
• business banking fees
• sick pay
• holiday pay
• pension contributions
• website or at least business phone / email address (none of that is free!)
• insurance - possibly more than one policy to cover public liability, loss of business, tax enquiry, etc
• companies house fees
• ICO fees
• cost of cleaning materials if they are supplying them
• travel to multiple client locations, both the time required and the actual travel costs
• time required to generate new business, manage client communications etc - do not underestimate how time consuming this is & this is time she can’t charge for
• making sure she has enough to cover and down periods, when a bunch of clients cancel her services at once because of the next economic crisis

This is not a post designed to generate sympathy for business owners. Simply trying to educate salaried employees as before I started my own business I didn’t know about all of these costs either.