Contracting

agnes · 31 Mar 2013 at 02:51

Hi guys, really only looking for advice from contractors or previous contractors, specifically in the IT industry.

My plans are going pretty well (I'm off traveling at the end of the year), and this is the last stage, contracting. It will be similar to what I have previously done. I finished my old job on Friday last week. A little sooner than expected, but nothing bad. My new and very improved CV went out on Wednesday. Thursday I had a couple of calls and 1 very promising lead.

Now, I have factored that I won't get a job within at least 3 - 5 weeks. Allowing my self a little holiday (still looking for work). But judging by the response to my CV and the jobs I have applied for. Could be a lot quicker. Even considering one is suggesting I might be starting this Wednesday if I agree to wage on Tuesday...

So! This brings me onto my next question, Ltd company or Umbrella? I am only doing 6 months worth of contracting. No more, no less. Won't be doing contracting in the UK for a while after as I will be in Oz contracting.

So, which do I do to benefit from tax? My friends are saying Umbrella due to the short period. Agencies are saying Ltd company otherwise the short periods will allow the tax man to full on fist me...

Note; never contracted before.

Thanks in advance.

P.S. preempting the 'why leave without a job secured'. 1) I have friends that have contracted in IT for a long time, and told me my chances will be higher with an immediate start date 2) I can go traveling now. I have more than enough saved up. But I want a 6 month contract under my belt before I get to Oz in January next year so it makes my life that little bit easier finding a contract.

[FnG]magnolia · 31 Mar 2013 at 03:26

There are loads of forumers who choose to contract and I think most of them use the umbrella option. One of the Accountant types will explain why I'm sure.

aln · 31 Mar 2013 at 03:30

[FnG]magnolia;24035373 said:
There are loads of forumers who choose to contract and I think most of them use the umbrella option. One of the Accountant types will explain why I'm sure.

Fairly sure an Ltd is typically the superior option actually but I'm not sure it'd be the option to take if you're planning on leaving the country sometime soon.

[FnG]magnolia · 31 Mar 2013 at 03:41

Perhaps my memory isn't so great. The umbrella choice often gets talked about when the question gets asked every week or so.

Ev0 · 31 Mar 2013 at 03:57

Generally speaking if it's for a shortish fixed term it's easier to go with an umbrella.

For just a 6 month period I would be doing that.

Danger Phoenix · 31 Mar 2013 at 10:21

Ltd is the best option for long term, especially if you are going to earn over £40k. For a short term like yours you are better off with an umbrella company (I have used Parasol in the past) because it is far less hassle setting that up then a Ltd company, which requires Companies House registration etc.

agnes · 31 Mar 2013 at 10:53

Ok guys, thanks! Will go with an umbrella, I will be going for Conduit PM as I supported them for the last 3 years in IT as they are a sister company of my old place haha.

Should make my life a little easier in case of any complications, knowing everyone in that company.

mattyfez · 31 Mar 2013 at 10:56

Yeh, Ltd can be more tax efficient if you earning a fair bit, but also it's more complex.

Umbrella is quick and easy especially for a first timer, if it's just 6 months it sounds more sensible. You can still claim expenses for travel to the customer and breakfast/ lunch etc.