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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I work client on a contract at a daily rate but

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I work for a client on a contract at a daily rate but I am paid by my umbrella company (so my client pays to umbrella company by raising invoices every month). I am registered as self-employed and file tax return/pay taxes directly to HMRC on the income I receive from umbrella company after their fee etc..
Now, my client may hire me as full time employee in this tax year. I think client may expect me to provide P45/P60. They don’t know that I am registered as self-employed with HMRC and think I am on PAYE with umbrella company. Will it really make difference to them? Do I need to be worried or can I just tell them I was self-employed and will look after my tax return at the end of the year for the period until employment start date, thus happy to complete starter check list. Will they be happy with that? And what option should I chose in starter checklist form – A or B. Actually it doesn’t state about if you have been self-employed, so should I chose option A (which states that this is my first job in this tax year, but I am concerned because I have been working and employed in a way so can that be considered wrong statement). Option A would mean that they should simply use full tax free allowance (10,600 and start calculating tax accordingly from that point rather than cumulative).
I can also shift to Ltd. Company pay model if that’s better in the eyes of client while moving to full time employment in the tax year.
And does all the above changes if I am employed by another employer in the tax year. Hope they don’t care what way, I had been receiving my pay?
Thanks for the help in advance.


Frankly, it won't bother your potential new employer if you were employed or self-employed and there is no reason why it should. Many people go to a new employer with no P45. As far as the starter checklist is concerned, you should select option B. You did have another job but it was on a self-employed basis and, therefore, you have no P45. The new employer will send your details to HMRC who will issue a tax code.

You will need to complete a tax return for 2015/16 and you may have tax to pay on your self-employed income if all your personal allowances are given against your new source of income. This is a common occurrence where people change from being self-employed to employed and is nothing to worry about. I've had plenty of clients go through the same process.

Look at the notes here for more information on the type of tax code you can expect to be used as a result of choosing option B.

I hope this helps but let me know if you have any further questions.

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Customer: replied 2 years ago.

Thanks, ***** *****

I just got an email saying you didn't get paid but just to advise I paid for the service. SO not sure what that means?

I am anyway happy with the service and will rate it accordingly.