Do I go limited or umbrella?
Discussion
It is easy and cheap to go limited - you can buy a company 'off the shelf' for about £50 IIRC. Most contractor-savvy accountants can do this for you. But it is a load of paperwork and, since IR35, very little upside beyond the 'limited' status.
Not sure what an umbrella would charge you, tbh. I'm sure it won't be nothing.
"Self employed" seems best at the moment, as you can put the tax money against the mortgage until it is time to pay.
Not sure what an umbrella would charge you, tbh. I'm sure it won't be nothing.
"Self employed" seems best at the moment, as you can put the tax money against the mortgage until it is time to pay.
Umbrella's tend to charge around 4-5% of your weekly earnings. However, they do provide you with all of the legally required insurances which can be costly. Also, IR35 makes it virtually impossible to prove that you are "self employed" in the eyes of the inland revenue so there are very few benefits going LTD. Bear in mind that 33% is still less that most Permanent jobs with equivalent salaries and lets face it, the contract rates are so much higher than permanent salaries that it makes up for the risks involved.
Jenko. said:
Defo go limited, IR35 is not an issue if you set it up correctly. Since a change in the law 18 months ago I would avoid umbrella companies and set up your own. Dependant on your rate per day / project it would be worth looking in to VAT reg.
Hope this helps.
IR35 can always come back and bite. Setting up the correct terms and conditions of the contract between your company and its customer(s) is only part of the solution. Day to day practice is just as important. Hope this helps.
Quite right, for the avoidance of doubt you need to make sure you avoid anything that could be transpired as "employment" not just in the wording of your contract but also in the daily operation of that contract. To date however I have rarely seen anyone caught out by this and it is quite difficult to prove /unprove.
if you are contracting for the short term while looking for a permanent job, go umbrella
If you are into contracting for the long haul, go Ltd and register yourself on the VAT flat rate scheme (FRS), whereby you charge VAT at 17.5% as usual, but Gordon only wants 12%, you keep the other 5.5%.....being VAT registerred also cements you against IR35, dont ask me how, but it does. Running my own Ltd company is the best thing I ever did.
also get yourself a good accountant, expect to pay circa 1000-1200 per year, yes you can get accountants for 5-600, but they are a bunch of useless plebs.....you get what you pay for, I used SJD accountancy who are a specialist contractor accountancy group for the IT sector (although I'm an engineer), and they were s
t-hot good, they chased me, and never the other way round.......that is ultimatley the difference between a good and bad accountant, they just do their stuff wihout you chasing, they know all the grey areas and I got me so much tax back I effectivley got my accounting fees for free.
If you are into contracting for the long haul, go Ltd and register yourself on the VAT flat rate scheme (FRS), whereby you charge VAT at 17.5% as usual, but Gordon only wants 12%, you keep the other 5.5%.....being VAT registerred also cements you against IR35, dont ask me how, but it does. Running my own Ltd company is the best thing I ever did.
also get yourself a good accountant, expect to pay circa 1000-1200 per year, yes you can get accountants for 5-600, but they are a bunch of useless plebs.....you get what you pay for, I used SJD accountancy who are a specialist contractor accountancy group for the IT sector (although I'm an engineer), and they were s
t-hot good, they chased me, and never the other way round.......that is ultimatley the difference between a good and bad accountant, they just do their stuff wihout you chasing, they know all the grey areas and I got me so much tax back I effectivley got my accounting fees for free.knighty said:
If you are into contracting for the long haul, go Ltd and register yourself on the VAT flat rate scheme (FRS), whereby you charge VAT at 17.5% as usual, but Gordon only wants 12%, you keep the other 5.5%.....being VAT registerred also cements you against IR35, dont ask me how, but it does. Running my own Ltd company is the best thing I ever did.
12% of 117.5 does not leave 5.5. Sounds like you need a better accountant to explain that to you.I was in your position November last year but under slightly different circumstances. I had been made redundant and one of my ex-companies clients asked me to do a short contract directly for them, I thought about going limited but as I planned getting another permy position soon after the contract finished I decided it was too much effort so went through an umbrella called GIANT.
The arrangement worked well, they invoiced the client, chased payment, paid me on time, took care of all my tax and NI payments as well as made sure I claimed all of the expenses that I was able to inside the law. IR35 is not an issue as by default they assume that you fall inside the rules.
For a short term contract it worked well, however through the summer (up until Sept) I kept picking up small contracts of 4 - 6 weeks with different companies so would have been well outside of IR35 and in hindsight would have been much better off as a limited.
I am out of work again now and finding the market quite slow (as expected) however, if I land a 6 month contract I will be seeking out a good accountant and going limited so as to keep as much of the money I earn as possible!
I think in short, if you are planning on finding a permy role any time soon and are contracting to make ends meet while you search then an umbrella is probably the easiest option, if you are a career contractor then spend some money on a good accountant and get yourself setup as a limited!
The arrangement worked well, they invoiced the client, chased payment, paid me on time, took care of all my tax and NI payments as well as made sure I claimed all of the expenses that I was able to inside the law. IR35 is not an issue as by default they assume that you fall inside the rules.
For a short term contract it worked well, however through the summer (up until Sept) I kept picking up small contracts of 4 - 6 weeks with different companies so would have been well outside of IR35 and in hindsight would have been much better off as a limited.
I am out of work again now and finding the market quite slow (as expected) however, if I land a 6 month contract I will be seeking out a good accountant and going limited so as to keep as much of the money I earn as possible!
I think in short, if you are planning on finding a permy role any time soon and are contracting to make ends meet while you search then an umbrella is probably the easiest option, if you are a career contractor then spend some money on a good accountant and get yourself setup as a limited!
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