Can you be employed and work as a contractor?

[thedeepdarkwood]

I am currently employed earning £50k pro rata. I only work 2 days a week. Workload throughout the year is really variable and my employer largely relies on subcontractors to fill the gaps. As we are really busy at the moment he has asked me to do an extra day a week for the next few months and paying me for this through paye. I was however wondering if he could pay me as a subcontactor for these instead? Is is allowed to do a combination of subcontracting and paye?

Also I know the subcontractors he uses that are charged at a lower day rate to the client than myself and do a similar role to me receive £400-£450 per day. This seems high compared to my salary. I do get 30 days holiday and 15% pension but how much would this equate to as a day rate?

I am wondering whether I should just suggest subcontracting all the time to my employer but if so I am not sure what rate I shoud ask for. Any ideas? I am not worried about the variable work as can be flexible.

Check out IR35 and see how that fits with your employment.

Thanks madeforthis but even more confused now. I am the only employee at present, everyone else is a subcontractor. We provide business support services mainly to public sector but also some private sector work which we bid for. Does this sound like I would be inside or outside IR35? All the subcontractors are one man bands and invoice my employer for work done.

OP if you're going to be doing exactly the same role on the additional day I think it would be very hard (well, impossible tbh) to argue that you're somehow outside IR35 for that one day.

You can use this link to check - www.gov.uk/guidance/check-employment-status-for-tax

No, I you cannot work for the same employee partly as a contractor and partly through PAYE.

In terms of swapping fully to being a contractor - I am not sure if IRP35 applies in this case but overall, it's unlikely to work for you and would be hard to justify.

In terms of your pay, you are currently getting paid in effect, £200 per day. Contractors are getting significantly more but only get paid when they work, don't get sick pay, holiday pay, pension etc. They're also at risk in that they can be laid off any time. Having said that, I can see that there is a strong argument that the contractors ARE being paid more than you, albeit probably not as MUCh more as it feels like.

I think you have two options:

Tell your boss that you need a pay rise. A contractor on £400per day working 5x a week for 42 weeks a year (ie not working 10 weeks a year) would be earning £84k. Admittedly, that doesn't take NI, pension contributions etc into account plus stability etc but there's a strong argument you should be on more than £50k.

Or, agree to do the additional days and to be paid via PAYE but that these days should be treated as overtime and paid at a higher level.

Pretty sure this is the EXACT situation that IR35 covers so no, you can't.

You will have costs as a sub. You'll need to make your own ni for the time, pension and most important liability insurance as a freelance. You should get quotes for that before you start to decide. The employer may not want the cost of HR writing separate contracts or they may be large enough to have this sort of thing in hand regularly. Also consider as pp say IR35.

Sub-contractors always earn more as they get no sick pay, holiday pay, pension contributions and they have to carry their own public liability and/or professional indemnity insurance.

They also pay corporation tax if they're a limited company, which they often have to be to get the gig.