IT Contracting - anyone here do it?
Discussion
bigandclever said:
Good job, because your understanding posted on here is incorrect.
Really, and I'm to take advice from barrack room accountants like yourself? Let me guess, you're part of the "I take home 90%" crowd, you then got busted by HMRC and now you're a pro accountant? Yes?
Get a life, and get a decent accountant. And I don't mean your mate at the local sweet factory either.
Numpty!
casbar said:
Don't know what accountant you have, but you charge VAT at 20% and pay the revenue 14.5% per quarter, only VAT not total income. Total income is used to see if you can stay in the scheme. After the first year you pay 15.5% Look here for full details http://www.hmrc.gov.uk/vat/start/schemes/flat-rate...
Just to re quote this, now that BigandStupid had waded in, I think the truth here is those who got stung by HMRC didn't actually have accountants in the first place. They went DIY, f
ked it up and now their view is that everyone is doing it wrong and everyone owes loads of money.So to the OP and others looking to go contracting, get a decent accountant.
Chest Rockwell said:
casbar said:
Don't know what accountant you have, but you charge VAT at 20% and pay the revenue 14.5% per quarter, only VAT not total income. Total income is used to see if you can stay in the scheme. After the first year you pay 15.5% Look here for full details http://www.hmrc.gov.uk/vat/start/schemes/flat-rate...
Just to re quote this, now that BigandStupid had waded in, I think the truth here is those who got stung by HMRC didn't actually have accountants in the first place. They went DIY, fked it up and now their view is that everyone is doing it wrong and everyone owes loads of money.So to the OP and others looking to go contracting, get a decent accountant.
So if you have invoiced £10,000 + VAT for the quarter, you would pay 14.5% of £12,000.
Chest Rockwell said:
casbar said:
Don't know what accountant you have, but you charge VAT at 20% and pay the revenue 14.5% per quarter, only VAT not total income. Total income is used to see if you can stay in the scheme. After the first year you pay 15.5% Look here for full details http://www.hmrc.gov.uk/vat/start/schemes/flat-rate...
Just to re quote this, now that BigandStupid had waded in, I think the truth here is those who got stung by HMRC didn't actually have accountants in the first place. They went DIY, fked it up and now their view is that everyone is doing it wrong and everyone owes loads of money.So to the OP and others looking to go contracting, get a decent accountant.
Net invoice amount: £1000
VAT @ 20%: £200
Gross invoice amount: £1200
Flat rate scheme (for IT) percentage: 14.5%
Amount to pay HMRC is calculated on the GROSS invoice amount for the flat rate scheme: £1200 x 14.5% = £174
First year discount is 1% in the first year of trading (again for IT) it's 13.5% and the example would be £162 owed to HMRC.
I agree get a decent accountant, but you don't need it for VAT returns as the calculation is simple. One thing HMRC could do to help is to change the wording on the VAT return form to make it clear that those on the Flat Rate Scheme need to enter GROSS invoice amounts, not the NET amounts the form asks for appropriate to those not on FRS.
Chest Rockwell said:
bigandclever said:
Good job, because your understanding posted on here is incorrect.
Really, and I'm to take advice from barrack room accountants like yourself? Let me guess, you're part of the "I take home 90%" crowd, you then got busted by HMRC and now you're a pro accountant? Yes?
Get a life, and get a decent accountant. And I don't mean your mate at the local sweet factory either.
Numpty!
Let me guess ... you're a bum on seat, pseudo-permy who couldn't run an actual business to save his sorry arse. You're wrong; accept it, learn from it, move on.
I've been contracting for 18 years, 16 of them with my current client. Their policy across their business is to employ contractors in all 'non-core business' roles - it costs them more, but they can hire and fire at will, that's their policy, I'm fine with it.
So, the upside is that if you get a good contract it can be lengthy and lucrative. Sometimes I wished I'd hopped about more, but it's a good place to work, very flexible, nice people, easy commute and they seem to like me, and I like them. I genuinely enjoy the daily challenges of my role, there is always something different to do, despite how long I've been there.
Contrast that with my first contract, I'd salted away enough of a deposit to buy my first house, signed the final papers at my solicitors to complete on a Thursday evening, walked in the office at 9am the next day to be told that the client had pulled the rug on our unfinished project and the whole team of 20 contractors were on a month's notice! That was a bit of a sense of humour failure for me and the first time it happens does make you think "bugger, no job, bills to pay".
Three bits of advice from me:
1) Try not to become a slave to the hourly rate. It's nice to make good wedge, but give yourslef some holidays to enjoy spending the money. I budget for 46 working weeks. A pal of mine used to take only 8 days holiday a year and worked every hour he could. He became hugely wealthy, but sadly died in a bike accident on (ratehr ironically) a rare day off. His sizeable fortune remained unenjoyed by him, sadly.
2) Do not listen to any peddler of Tax Avoidance Schemes. I did, and found a hefty bill at the end of it. If something sounds too good to be true, it probably is. As others have said, get a good accountant and be sure of your IR35 status.
3) Some (not all) agents will stiff you for as much as they can. Try to see it as a necessary evil and make sure you're happy with what you are taking home, or be like me and go direct - not always possible though.
I've worked with hundreds of Contractors over the years. I can count a handful who have gone back to being permie. Not saying I wouldn't if made the right offer, but most people who try it enjoy it.
Oh, and you'll notice that days absence through sickness takes a massive fall. If your leg's fallen off take a sickie, otherwise get to work, it's the Contractor way!
So, the upside is that if you get a good contract it can be lengthy and lucrative. Sometimes I wished I'd hopped about more, but it's a good place to work, very flexible, nice people, easy commute and they seem to like me, and I like them. I genuinely enjoy the daily challenges of my role, there is always something different to do, despite how long I've been there.
Contrast that with my first contract, I'd salted away enough of a deposit to buy my first house, signed the final papers at my solicitors to complete on a Thursday evening, walked in the office at 9am the next day to be told that the client had pulled the rug on our unfinished project and the whole team of 20 contractors were on a month's notice! That was a bit of a sense of humour failure for me and the first time it happens does make you think "bugger, no job, bills to pay".
Three bits of advice from me:
1) Try not to become a slave to the hourly rate. It's nice to make good wedge, but give yourslef some holidays to enjoy spending the money. I budget for 46 working weeks. A pal of mine used to take only 8 days holiday a year and worked every hour he could. He became hugely wealthy, but sadly died in a bike accident on (ratehr ironically) a rare day off. His sizeable fortune remained unenjoyed by him, sadly.
2) Do not listen to any peddler of Tax Avoidance Schemes. I did, and found a hefty bill at the end of it. If something sounds too good to be true, it probably is. As others have said, get a good accountant and be sure of your IR35 status.
3) Some (not all) agents will stiff you for as much as they can. Try to see it as a necessary evil and make sure you're happy with what you are taking home, or be like me and go direct - not always possible though.
I've worked with hundreds of Contractors over the years. I can count a handful who have gone back to being permie. Not saying I wouldn't if made the right offer, but most people who try it enjoy it.
Oh, and you'll notice that days absence through sickness takes a massive fall. If your leg's fallen off take a sickie, otherwise get to work, it's the Contractor way!
PurpleTurtle said:
I've been contracting for 18 years, 16 of them with my current client. Their policy across their business is to employ contractors in all 'non-core business' roles - it costs them more, but they can hire and fire at will, that's their policy, I'm fine with it.
So, the upside is that if you get a good contract it can be lengthy and lucrative. Sometimes I wished I'd hopped about more, but it's a good place to work, very flexible, nice people, easy commute and they seem to like me, and I like them. I genuinely enjoy the daily challenges of my role, there is always something different to do, despite how long I've been there.
Contrast that with my first contract, I'd salted away enough of a deposit to buy my first house, signed the final papers at my solicitors to complete on a Thursday evening, walked in the office at 9am the next day to be told that the client had pulled the rug on our unfinished project and the whole team of 20 contractors were on a month's notice! That was a bit of a sense of humour failure for me and the first time it happens does make you think "bugger, no job, bills to pay".
Three bits of advice from me:
1) Try not to become a slave to the hourly rate. It's nice to make good wedge, but give yourslef some holidays to enjoy spending the money. I budget for 46 working weeks. A pal of mine used to take only 8 days holiday a year and worked every hour he could. He became hugely wealthy, but sadly died in a bike accident on (ratehr ironically) a rare day off. His sizeable fortune remained unenjoyed by him, sadly.
2) Do not listen to any peddler of Tax Avoidance Schemes. I did, and found a hefty bill at the end of it. If something sounds too good to be true, it probably is. As others have said, get a good accountant and be sure of your IR35 status.
3) Some (not all) agents will stiff you for as much as they can. Try to see it as a necessary evil and make sure you're happy with what you are taking home, or be like me and go direct - not always possible though.
I've worked with hundreds of Contractors over the years. I can count a handful who have gone back to being permie. Not saying I wouldn't if made the right offer, but most people who try it enjoy it.
Oh, and you'll notice that days absence through sickness takes a massive fall. If your leg's fallen off take a sickie, otherwise get to work, it's the Contractor way!
I don't know any other contractors (including myself) who would take a day off for a measly fallen-off leg or two!So, the upside is that if you get a good contract it can be lengthy and lucrative. Sometimes I wished I'd hopped about more, but it's a good place to work, very flexible, nice people, easy commute and they seem to like me, and I like them. I genuinely enjoy the daily challenges of my role, there is always something different to do, despite how long I've been there.
Contrast that with my first contract, I'd salted away enough of a deposit to buy my first house, signed the final papers at my solicitors to complete on a Thursday evening, walked in the office at 9am the next day to be told that the client had pulled the rug on our unfinished project and the whole team of 20 contractors were on a month's notice! That was a bit of a sense of humour failure for me and the first time it happens does make you think "bugger, no job, bills to pay".
Three bits of advice from me:
1) Try not to become a slave to the hourly rate. It's nice to make good wedge, but give yourslef some holidays to enjoy spending the money. I budget for 46 working weeks. A pal of mine used to take only 8 days holiday a year and worked every hour he could. He became hugely wealthy, but sadly died in a bike accident on (ratehr ironically) a rare day off. His sizeable fortune remained unenjoyed by him, sadly.
2) Do not listen to any peddler of Tax Avoidance Schemes. I did, and found a hefty bill at the end of it. If something sounds too good to be true, it probably is. As others have said, get a good accountant and be sure of your IR35 status.
3) Some (not all) agents will stiff you for as much as they can. Try to see it as a necessary evil and make sure you're happy with what you are taking home, or be like me and go direct - not always possible though.
I've worked with hundreds of Contractors over the years. I can count a handful who have gone back to being permie. Not saying I wouldn't if made the right offer, but most people who try it enjoy it.
Oh, and you'll notice that days absence through sickness takes a massive fall. If your leg's fallen off take a sickie, otherwise get to work, it's the Contractor way!
I love contracting but there are a few downsides, I saw a guy this morning slowly hobbling into work on crutches and thought to myself that has to be a contractor, and when I spotted him in the canteen he confirmed it, yet another slave to the day rate not willing to be sick or on holiday.
I personally don't hold with this "contractor sickie" thing. I will not go into the office with colds/flu or anything that can be spread to co-workers. It is utterly selfish and ultimately could result in significant loss of production. I admit to doing it last year (was my first week in a new contract), within a week, 6 of the 8 in the office we shared were ill, I was not particularly popular.
NormalWisdom said:
I personally don't hold with this "contractor sickie" thing. I will not go into the office with colds/flu or anything that can be spread to co-workers. It is utterly selfish and ultimately could result in significant loss of production. I admit to doing it last year (was my first week in a new contract), within a week, 6 of the 8 in the office we shared were ill, I was not particularly popular.
Indeed. When I was a permie we used to send home contractors who turned up sick, and if they took the piss we would just terminate them. Now I'm a contractor I work from home if I can, otherwise I just take the hit. Infecting your client is never a good idea 
Gaspode said:
NormalWisdom said:
I personally don't hold with this "contractor sickie" thing. I will not go into the office with colds/flu or anything that can be spread to co-workers. It is utterly selfish and ultimately could result in significant loss of production. I admit to doing it last year (was my first week in a new contract), within a week, 6 of the 8 in the office we shared were ill, I was not particularly popular.
Indeed. When I was a permie we used to send home contractors who turned up sick, and if they took the piss we would just terminate them. Now I'm a contractor I work from home if I can, otherwise I just take the hit. Infecting your client is never a good idea 
Chest Rockwell said:
Just to re quote this, now that BigandStupid had waded in, I think the truth here is those who got stung by HMRC didn't actually have accountants in the first place. They went DIY, fked it up and now their view is that everyone is doing it wrong and everyone owes loads of money.
So to the OP and others looking to go contracting, get a decent accountant.
Having re-looked at this, i got it wrong, read the HRMC web page, and it does look like VAT is calculated on the Turnover. Good job I have an accountant and don't do this myself.ked it up and now their view is that everyone is doing it wrong and everyone owes loads of money.So to the OP and others looking to go contracting, get a decent accountant.
I'll be looking at Contractor roles in 12-18 months time I think.
I havent taken a day off sick since April last year (recovering from an operation) and havent actually taken a sick day in around 3 years, but thats mainly because im not a wet soft southerner Joking aside, I've always had the belief that if I can get out of bed, I can go to work.
That is not to say that I wouldnt take time off for holidays etc. I'd just make sure I had twice what I would earn saved up first so that I could really enjoy it and not worry.
I havent taken a day off sick since April last year (recovering from an operation) and havent actually taken a sick day in around 3 years, but thats mainly because im not a wet soft southerner
Joking aside, I've always had the belief that if I can get out of bed, I can go to work.That is not to say that I wouldnt take time off for holidays etc. I'd just make sure I had twice what I would earn saved up first so that I could really enjoy it and not worry.
Gaspode said:
NormalWisdom said:
I personally don't hold with this "contractor sickie" thing. I will not go into the office with colds/flu or anything that can be spread to co-workers. It is utterly selfish and ultimately could result in significant loss of production. I admit to doing it last year (was my first week in a new contract), within a week, 6 of the 8 in the office we shared were ill, I was not particularly popular.
If you know anything about ME (chronic fatigue), you'll know that most people who are victims to post viral chronic fatigue are those that fail to take time off when they should. My wife worked for a charity, and refused to let her clients down. Until her body said "enough". And made her have 5 years off.
Best move I ever made. I'm 24 and have been contracting for a few years now.
Aye the money is great but I prefer the flexibility and ability to take time off with zero notice more appealing than the extra coin. I've got mates who are contractors and work every hour under the sun chasing the ££ where as I'm the opposite, I only work when I need to.
Just be aware that in your first two years it can be tricky to get mortgages or other financial related things.
Aye the money is great but I prefer the flexibility and ability to take time off with zero notice more appealing than the extra coin. I've got mates who are contractors and work every hour under the sun chasing the ££ where as I'm the opposite, I only work when I need to.
Just be aware that in your first two years it can be tricky to get mortgages or other financial related things.
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