C45 questions

superdon1983

Hi there was wondering if anyone could give me some info about going self employed C45. im a tower crane driver earning 23 euros a hour paye plus time and a half . im earning about 1500 for a 60 hour week about 1100 after prsi and tax.

ive just been offered 30 euros an hour and 35 euros overtime to go on c45.
ive worked out that on c45 i would be earning 1870 euros before deductions
im not to sure what rates of tax i will pay, if it will be a flat rate of 35% of everything or what. also ive been told if i get a good acountant i can claim back some of my tax back but what for and how much im not sure.

kluivert

C45's the world of Contractors Tax.

The way it works.

As a self employed contractor you invoice the person with the work you have done say every month.

As you are a Crane Driver you may have to register for Vat if your net sales are going to be greater than €26000 a year, if greater you must register for Vat.

Anyway back to the point....

The person you invoice will then make a cheque payment to you of 65% of the invoice and give you a C45 for the other 35% which is withheld. The person you invoiced will pay the 35% to the revenue.

You take the C45 (Green page) and send to your local tax office and the tax office send you out a cheque payment for the 35% withheld.

As a self employed person, you will have to make a self employed income tax return by 31st October in the following year.

kluivert

Looking at the above proposal, i think you would be better off staying as an employee.

As it stands you earn €23 an hour. and time and a half for over time.

Say you are self employed and your hourly charge is €23 + Vat at 13.5%.

Thats €26.11 an hour and you are being offered €30.

Overtime as it is stands at €34.50 an hour compared to €35.

superdon1983

thanks for the reply i forgot to say my rate would be 30 euros plus vat and 35 plus vat but i would lose holiday pay and travel time of a hour a day.

it sound queit complex i get 35% withheld which i can apply to get back then have to do a tax return and give it back again, have i got that right?

any idea how much you can with in reason deduct for travel food and other expense's

kluivert wrote:

Looking at the above proposal, i think you would be better off staying as an employee.

As it stands you earn €23 an hour. and time and a half for over time.

Say you are self employed and your hourly charge is €23 + Vat at 13.5%.

Thats €26.11 an hour and you are being offered €30.

Overtime as it is stands at €34.50 an hour compared to €35.

kluivert

You got the first part right. You get the 35% withheld and then re-claim it from the your local tax office.

A note on Self employed income tax.

If you start trading next month as self employed you will have to prepare a set of accounts for the "period" end March to December 2006. The profits you make in this period will be the basis for your tax return on the 31st October 2007.

You in effect your paying income tax ten months in arrears.

Then for the next year, you will prepare accounts for the "year" end 31st December 2007. The profits you make in this period January to December 2007 will be the basis for your income tax on the 31st October 2008.

In order to Register as self employed you need to fill out a TR1 form available from your local tax office. You will have to register for Relevant Contractors Tax (RCT), Vat and Self Employed Income Tax.

I am an part qualified accountant but i do recommend that you speak to an accountant in person who can take the time and sit down with you to explain these points in depth.

In relation to expenses, you can claim expenses which relate to the trade only. This idea fo a sandwich is not a business expense, this feeds your gut and not the business, do you understand.

Diesel for the car can be claimed, so can telephone bills but a proportion will be added back for personal use. Protective clothing as well can be claimed. As a crane driver i cant think of any order expenses.

A word of warning. Make sure your employer is not using this as a means to let you go. A contract between a contractor and a sub contractor can be ended at the completion of the job. Its not so easy when it comes to the same case as an employee ie redundacy money.

Carb

I don't want to confuse things here, but despite what seems to be commonly thought in the construction industry, you or your employer can't just decide that you are now going to be self employed. If you are doing all your work for one company, and I assume you don't own a crane, if the revenue decide to look into it, they may deem that you are in fact an employee. The easiest way around this is to set yourself up as ltd company, as a company can't be an employee. There is the initial set up cost of probably 400/500, but after that, there isn't much extra cost apart from the annual return. There are other legal obligations, but nothing that isn't't too difficult to adhere to. Also, since you'd be taking in close on 100k a year, there maybe pension benefits etc that you could utilise. Its just another option to consider.

kluivert

I have to agree with carb on that point.

The revenue have a test to examine whether or not you are self employed or actually an employee.

This is actuall business law rather than tax law but has been modified to suit the revenue.

I however dont agree on the point of forming a Limied Company. more stringent regulations compared to being a sole trader. Greater adherance to laws and regulations and greater fines and penalties.

Companies are audit exempt up to a threshold so accounts fees should be small but if your annual return is late, then the accounts which are late will require an audit as well as the yfollowing year, which will mean higher accountancy fees.

I have yet to come across a case in which the revenue examine or question the business relationship with client(s). So long as you complete your tax returns on time, you should manage to stay on the revenue radar.

Carb

kluivert wrote:

I have to agree with carb on that point.

The revenue have a test to examine whether or not you are self employed or actually an employee.

This is actuall business law rather than tax law but has been modified to suit the revenue.

I however dont agree on the point of forming a Limied Company. more stringent regulations compared to being a sole trader. Greater adherance to laws and regulations and greater fines and penalties.

Companies are audit exempt up to a threshold so accounts fees should be small but if your annual return is late, then the accounts which are late will require an audit as well as the yfollowing year, which will mean higher accountancy fees.

I have yet to come across a case in which the revenue examine or question the business relationship with client(s). So long as you complete your tax returns on time, you should manage to stay on the revenue radar.

I'm not recommending that he incorporate himself, I'm just saying its an option as there may be tax and pension benefits. But seriously though, laws, regulations, fines penalties, these are terms used by accountants to justify fees. Regardless of which option he chooses, he's going to have to engage the services of an accountant, and the difference in cost should be minimal. The only regulation that seems to cause people trouble is filing their return within nine months, why, I don't know, as I would think its plently of time. On the off chance of needing an audit, we're talking about a one man band with one invoice per week, hardly any purchases, no fixed assets or creditors. Its hardly likely to have the Big 4 touting for his business. I'd be surprised if his accountant charged more for the audit report.

One point I should make about no longer been an employee. What happens in the case of an accident. You're driving a crane here, so a lot of people's safety is in your hands. Are you going to have to get insurance? Have you factored in this cost? You could leave yourself open to be sued.

kluivert

Good point, insurance would be very high.

Pataman

Small point lads, is it not C35?

Our man in Havana

This is usually a scam to avoid employers PRSI.

kluivert

C45 or RCTDC

Thats what i thought its a way of getting out of PRSI. But look at the figures.

Carb

Its not just down to the PRSI, so it hard to say whether the new hourly rates are enough. As the OP said, holidays, sick pay, are no longer there plus professional fees, insurance, lack of job security, notice periods, these are all hard to quantify. Most employers go down this route to avoid employers PRSI, and although the figures seem to contradict this, you can be sure the employer wouldn't be offering this unless there was some gain for him/her.

kadon

if i start work using a c45 if i have no work after a year am i entitled to the dole or am i not

Our man in Havana

You would be means tested for Jobseekers Allowance.

kadon

so it would not effect me really then i will still be entitled to it

Our man in Havana

If you have no work you are entitled to it subject to a means test.

kadon

ok so thanks for that...

kadon

after paying vat from now till this time next year or a little sooner say i earn inc 35% vat 1512.90 per week thats say 6000 a month and 72 ooo per year the vat is 25 000 for year approx
the vat for year how much sould i get back at end of job.. when i go unemployed again cause no work