Contracting - Inside vs Outside IR35 - Confused
Discussion
I am getting absolutely hammered on LinkedIn at the moment by recruiters and usually just ignore them, but for some reason I actually answered a call from one who had found me on LinkedIn and he had a contract role inside IR35 that would double my current salary which peaked my interest. It is for 6 months with a high probability of roll on after that and they would potentially be able to wait for my current perm notice period which is a very tempting fairly safe way into contracting.
He also had a role outside IR35 that would work out equivalent take home to the inside contract but I guess I would not see the immediate benefit as would have to balance things to make it tax efficient and could really do with the short term gain. This role would probably be there anyway after the initial 6 months.
Very tempted to go through the process for both, but still unsure if I want to leave the safety of my current role. Would it be more sensible to go for the inside if offered both? Really confused as to where I would stand. Any and all advice appreciated.
For reference, this is as a lead Azure data engineer, first role is for an insurance company, the other is for a consultancy.
He also had a role outside IR35 that would work out equivalent take home to the inside contract but I guess I would not see the immediate benefit as would have to balance things to make it tax efficient and could really do with the short term gain. This role would probably be there anyway after the initial 6 months.
Very tempted to go through the process for both, but still unsure if I want to leave the safety of my current role. Would it be more sensible to go for the inside if offered both? Really confused as to where I would stand. Any and all advice appreciated.
For reference, this is as a lead Azure data engineer, first role is for an insurance company, the other is for a consultancy.
Edited by HappyMidget on Monday 17th May 14:56
HappyMidget said:
I am getting absolutely hammered on LinkedIn at the moment by recruiters and usually just ignore them, but for some reason I actually answered a call from one who had found me on LinkedIn and he had a contract role inside IR35 that would double my current salary which peaked my interest. It is for 6 months with a high probability of roll on after that and they would potentially be able to wait for my current perm notice period which is a very tempting fairly safe way into contracting.
He also had a role inside IR35 that would work out equivalent take home to the inside contract but I guess I would not see the immediate benefit as would have to balance things to make it tax efficient and could really do with the short term gain. This role would probably be there anyway after the initial 6 months.
Very tempted to go through the process for both, but still unsure if I want to leave the safety of my current role. Would it be more sensible to go for the inside if offered both? Really confused as to where I would stand. Any and all advice appreciated.
For reference, this is as a lead Azure data engineer, first role is for an insurance company, the other is for a consultancy.
Sorry don't follow, you have an offer for two inside roles? Not sure I understand the question.He also had a role inside IR35 that would work out equivalent take home to the inside contract but I guess I would not see the immediate benefit as would have to balance things to make it tax efficient and could really do with the short term gain. This role would probably be there anyway after the initial 6 months.
Very tempted to go through the process for both, but still unsure if I want to leave the safety of my current role. Would it be more sensible to go for the inside if offered both? Really confused as to where I would stand. Any and all advice appreciated.
For reference, this is as a lead Azure data engineer, first role is for an insurance company, the other is for a consultancy.
Note that you should consider that the 6 month contract may not even start. this is the joy of contracting. If you want to jump do it for all the right reasons and not because £s are flashing.
If either of these positions require you to use an umbrella company have a look at this thread:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
If you really want to become a contractor do some research & maybe have a look at this site:
https://www.contractoruk.com/
https://forums.contractoruk.com/
https://www.pistonheads.com/gassing/topic.asp?h=0&...
If you really want to become a contractor do some research & maybe have a look at this site:
https://www.contractoruk.com/
https://forums.contractoruk.com/
worsy said:
Sorry don't follow, you have an offer for two inside roles? Not sure I understand the question.
Note that you should consider that the 6 month contract may not even start. this is the joy of contracting. If you want to jump do it for all the right reasons and not because £s are flashing.
Sorry, had to edit, 2nd role is outside.Note that you should consider that the 6 month contract may not even start. this is the joy of contracting. If you want to jump do it for all the right reasons and not because £s are flashing.
Mr Pointy said:
If either of these positions require you to use an umbrella company have a look at this thread:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
If you really want to become a contractor do some research & maybe have a look at this site:
https://www.contractoruk.com/
https://forums.contractoruk.com/
I have wanted to contract for a long time, but never really had the opportunity before where roles would wait for a perm employee to roll off. I like my current consultancy, but keep being put on long term projects whereas I like to mix it up quite a bit to keep me engaged. Plus, coming into consulting later in life has me at a lower level than I really should be.https://www.pistonheads.com/gassing/topic.asp?h=0&...
If you really want to become a contractor do some research & maybe have a look at this site:
https://www.contractoruk.com/
https://forums.contractoruk.com/
Gecko1978 said:
If you want to be a contractor and self employed outside, if you want to be an. Employee with zero rights an pay to get paid inside via umbrella....quite simple really.
But would an inside be a good way to get some money in the bank to start out whilst getting everything setup for outside contracts?HappyMidget said:
I have wanted to contract for a long time, but never really had the opportunity before where roles would wait for a perm employee to roll off.
If you haven't had the courage to quit with the confidence that will you will find something then contracting probably isn't for you. Sorry if that's not what you want to hear.HappyMidget said:
But would an inside be a good way to get some money in the bank to start out whilst getting everything setup for outside contracts?
If you are going to go contracting you should have enough ready cash put aside to survive for at least six months & preferably 12 months without income. That would have given you enough behind you to start looking for work. Bluequay said:
HappyMidget said:
I have wanted to contract for a long time, but never really had the opportunity before where roles would wait for a perm employee to roll off.
If you haven't had the courage to quit with the confidence that will you will find something then contracting probably isn't for you. Sorry if that's not what you want to hear.The inside contract is £720pd, outside £560. I don't think I could ever get that as a perm.
Bluequay said:
If you haven't had the courage to quit with the confidence that will you will find something then contracting probably isn't for you. Sorry if that's not what you want to hear.
Where did he mention courage? Being in a perm job can be comfortable. Doesn't mean he wouldn't thrive in contracting
Mr Pointy said:
HappyMidget said:
But would an inside be a good way to get some money in the bank to start out whilst getting everything setup for outside contracts?
If you are going to go contracting you should have enough ready cash put aside to survive for at least six months & preferably 12 months without income. That would have given you enough behind you to start looking for work. Deep Thought said:
Where did he mention courage? Being in a perm job can be comfortable.
Doesn't mean he wouldn't thrive in contracting
No it doesn't but ithere not being any roles willing to wait for a permanent employees notice period never put me off or any of the other contractors with the right mentality I know. Doesn't mean he wouldn't thrive in contracting
If you don't have the courage to just quit and go for it how will you react if the contract you are on gets canned 2 weeks in.
HappyMidget said:
Mr Pointy said:
If either of these positions require you to use an umbrella company have a look at this thread:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
If you really want to become a contractor do some research & maybe have a look at this site:
https://www.contractoruk.com/
https://forums.contractoruk.com/
I have wanted to contract for a long time, but never really had the opportunity before where roles would wait for a perm employee to roll off. I like my current consultancy, but keep being put on long term projects whereas I like to mix it up quite a bit to keep me engaged. Plus, coming into consulting later in life has me at a lower level than I really should be.https://www.pistonheads.com/gassing/topic.asp?h=0&...
If you really want to become a contractor do some research & maybe have a look at this site:
https://www.contractoruk.com/
https://forums.contractoruk.com/
Bluequay said:
Deep Thought said:
Where did he mention courage? Being in a perm job can be comfortable.
Doesn't mean he wouldn't thrive in contracting
No it doesn't but ithere not being any roles willing to wait for a permanent employees notice period never put me off or any of the other contractors with the right mentality I know. Doesn't mean he wouldn't thrive in contracting
If you don't have the courage to just quit and go for it how will you react if the contract you are on gets canned 2 weeks in.
I think you may have missed the boat on contracting especially with IR35 - I have been contracting for the last 20 odd years but have now gone permi due to IR35 causing the contract market to go limp - If you want to contract (I loved it and wished things had not changed) - do your sums correctly - remember you will probably have a weeks notice and if a company wants to get rid of you they will - It used to take at least a month to get another contract - I would assume it takes longer now - so you need to ensure you keep money aside for that. If you are outside IR35 you also will have taxs to pay - employee and employer - accountancy costs and you need to take into account sickness and holidays. (public holidays and leisure) -
If you are inside IR35 - you may as well stay a permi as you will probably be on a better deal.
If you are inside IR35 - you may as well stay a permi as you will probably be on a better deal.
Deep Thought said:
Mr Pointy said:
HappyMidget said:
But would an inside be a good way to get some money in the bank to start out whilst getting everything setup for outside contracts?
If you are going to go contracting you should have enough ready cash put aside to survive for at least six months & preferably 12 months without income. That would have given you enough behind you to start looking for work. Mr Pointy said:
Deep Thought said:
Mr Pointy said:
HappyMidget said:
But would an inside be a good way to get some money in the bank to start out whilst getting everything setup for outside contracts?
If you are going to go contracting you should have enough ready cash put aside to survive for at least six months & preferably 12 months without income. That would have given you enough behind you to start looking for work. Your skills are in demand and you're in a fortunate position to be able to capitalise on that whichever way you look at it.
I'm in infrastructure with a fair bit of azure and the market is currently busier than I've ever known it in 14 years of contracting. The IR35 reform has shaken things up but plenty of opportunities still exist whether inside or out. The pessimists who lament the decline from the glory days can all retire or go perm and the rest of us can get on with it. They have a point, but it is what it is and we have to make the most of the system that we're operating in. I'm far more positively affected by the pandemic induced acceptance of remote working than I am negatively impacted by IR35 so not all change is for the worse.
Essentially the main difference between the two contracts you're discussing is that the old one is decreed (by the end client) to be outside which means the traditional limited company engagement model can apply - you can incorporate a company and do things the old fashioned way on business to business terms, and take advantage of the relative (though diminished) tax efficiency and ability to offset genuine business expenses against tax etc. You manage the accounts, the company pays corp tax and you pay income tax and NI as due.
The inside contract would be between yourself as an individual and an umbrella company putting all the earnings through an employer's payroll so deductions are taken PAYE and you are sent the net. Its essentially a fixed term employment contract with (as said above) no rights or benefits.
Neither is necessarily more or less "secure" than the other.
One detail you'll want to establish with the inside role is whether the rate is before or after statutory employers deductions (including employers NI) are deducted. Most agencies list this rate gross of employers costs because it sounds higher but technically they should quote net or at least provide a breakdown and be transparent about it. Assuming its gross (most are) you can lop £100 off that rate to cover these deductions.
If thats the case I would take a 560 outside engagement all day long, all other things being equal. It gives you the most flexibility and potentially puts more of the earned fee in your pocket.
Thats not to say all inside jobs are bad. If there's a salary sacrifice option you could for example avoid the worst of the tax impact by maximising pension contributions instead of taking it all as salary.
I'm in infrastructure with a fair bit of azure and the market is currently busier than I've ever known it in 14 years of contracting. The IR35 reform has shaken things up but plenty of opportunities still exist whether inside or out. The pessimists who lament the decline from the glory days can all retire or go perm and the rest of us can get on with it. They have a point, but it is what it is and we have to make the most of the system that we're operating in. I'm far more positively affected by the pandemic induced acceptance of remote working than I am negatively impacted by IR35 so not all change is for the worse.
Essentially the main difference between the two contracts you're discussing is that the old one is decreed (by the end client) to be outside which means the traditional limited company engagement model can apply - you can incorporate a company and do things the old fashioned way on business to business terms, and take advantage of the relative (though diminished) tax efficiency and ability to offset genuine business expenses against tax etc. You manage the accounts, the company pays corp tax and you pay income tax and NI as due.
The inside contract would be between yourself as an individual and an umbrella company putting all the earnings through an employer's payroll so deductions are taken PAYE and you are sent the net. Its essentially a fixed term employment contract with (as said above) no rights or benefits.
Neither is necessarily more or less "secure" than the other.
One detail you'll want to establish with the inside role is whether the rate is before or after statutory employers deductions (including employers NI) are deducted. Most agencies list this rate gross of employers costs because it sounds higher but technically they should quote net or at least provide a breakdown and be transparent about it. Assuming its gross (most are) you can lop £100 off that rate to cover these deductions.
If thats the case I would take a 560 outside engagement all day long, all other things being equal. It gives you the most flexibility and potentially puts more of the earned fee in your pocket.
Thats not to say all inside jobs are bad. If there's a salary sacrifice option you could for example avoid the worst of the tax impact by maximising pension contributions instead of taking it all as salary.
theboss said:
snip
One detail you'll want to establish with the inside role is whether the rate is before or after statutory employers deductions (including employers NI) are deducted. Most agencies list this rate gross of employers costs because it sounds higher but technically they should quote net or at least provide a breakdown and be transparent about it. Assuming its gross (most are) you can lop £100 off that rate to cover these deductions.
If thats the case I would take a 560 outside engagement all day long, all other things being equal. It gives you the most flexibility and potentially puts more of the earned fee in your pocket.
snip.
Especially if there are costs of commute, hotels etc.One detail you'll want to establish with the inside role is whether the rate is before or after statutory employers deductions (including employers NI) are deducted. Most agencies list this rate gross of employers costs because it sounds higher but technically they should quote net or at least provide a breakdown and be transparent about it. Assuming its gross (most are) you can lop £100 off that rate to cover these deductions.
If thats the case I would take a 560 outside engagement all day long, all other things being equal. It gives you the most flexibility and potentially puts more of the earned fee in your pocket.
snip.
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