Making the move from PAYE to a Self-Employed Contractor

A: The first question is whether you are going to trade as a sole trader or through your own company. There are several factors you should consider when choosing how you want to trade and your accountant can talk you through these in detail.

You will also need to talk to your accountant about taxes as it is vitally important to understand what taxes you may be liable for as a self-employed individual. 

If you are operating as a sole trader you should register for Income tax.  If you are operating through a company you should register for Corporation Tax.

If operating as a company, the company will need to register as an employer and return the taxes deducted on the wages paid to you as director.

The business (whether sole trade or not) may also be required to register for VAT.   If the value of the services provided exceeds or is likely to exceed €37,500 in a twelve month period then the business must register for VAT. 

If a company hires a self-employed contractor they are not required to pay employer’s PRSI on payments, this carries certain consequences for you the contractor in that you will not be automatically entitled to a number of social welfare payments such as jobseekers benefit.  The self-employed individual is also not entitled to the normal employee benefits such as:

• Holiday pay
• Sick pay
• Redundancy notice and payment

It is important that all these issues are considered before deciding whether or not to become a self-employed contractor.

Date published 16 Feb 2018

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.