Contractors - IT Sector

SMN

SMN

SMN

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Does anyone contract here / have experience of contracting? I've been headhunted for a contracted role, but it lists "£20 PAYE or £27 LTD" - i'm assuming these are relating to tax, income tax etc but can anyone elaborate a bit further?

From what i can find, LTD is where they pay you more but you have to sort out your own taxes etc whereas PAYE is done for you - but is the PAYE £p/h the post-tax amount?

Thanks in advance.
 
All I can say is be very carefull with contracting. I'm with a large IT firm and we are looking at getting rid of all contractors soon
 
When I first started in IT (2004) I was contracting through an umbrella company - they charged about £15 a week I think and take care of all the tax. You pay a little more NI this way, but the advantage is you can claim expenses back off your tax (mileage, food, etc).

As I understand it, PAYE through the agency is just as if you were a perm employee with them.

This is the guide from the umbrella company I was with - not a recommendation for them as such, but useful info http://www.parasolgroup.co.uk/guides-to-contracting/
 
It does annoy me that people go to such trouble to avoid paying tax.
Many many one-man Limited companies are started for no other reason than the employee wants to avoid PAYE and draw his wages via dividends at a lower tax rate.
Umbrella companies are just a more convoluted way of doing that.

Not saying that there aren't valid reasons why someone might want to set up a Limited company to represent themselves as a sole trader, mind.
 
But contractors dont get holiday or sick pay, pensions or car allowances. Plus they're looking for their next job every 6 - 12 months so need some reserve cash to cover any time out of work.

Paying less tax is compensation for the things permies take for granted, contractors earn way more money but take on more risk as they'll be the 1st ones out of a job.
 
markweatherill said:
It does annoy me that people go to such trouble to avoid paying tax.
Many many one-man Limited companies are started for no other reason than the employee wants to avoid PAYE and draw his wages via dividends at a lower tax rate.
Umbrella companies are just a more convoluted way of doing that.

Not saying that there aren't valid reasons why someone might want to set up a Limited company to represent themselves as a sole trader, mind.
Click to expand...

Whats wrong with avoiding tax? Your stupid if you pay what you don't need to.
 
GuRkHa//$PIMP$ said:
All I can say is be very carefull with contracting. I'm with a large IT firm and we are looking at getting rid of all contractors soon
Click to expand...

You could have posted that same post any time in the last 10 years to be honest and it could easily have been true. It's swings and roundabouts.
 
The PAYE is not the post-tax amount .. it is the amount if you go permie (probably with an 'easy-release' clause in the permie contract).

They're prepared to pay more if you go LTD company as they have less responsibilities towards you (as in, they don't have to give a monkeys about you personally, your stupid 'career path', the fact you don't get on with Maureen, or like the temperature of the office, the fact you really want to do something a bit different, and your demands for 20 days holiday a year - they don't have to even pretend to remotely care ..).

Get paid more money to be treated generally a bit worse? The choice is yours ..
 
GuRkHa//$PIMP$ said:
All I can say is be very carefull with contracting. I'm with a large IT firm and we are looking at getting rid of all contractors soon
Click to expand...

Yup, be very careful.

Our coffee machine broke this morning and squirted me with scalding water. I dare say your coffee machine will do something similar before long.
 
tbh being self employed is like saying to the government HERE I AM, SHAFT ME FOR THE NEXT X YEARS.
stopped being self employed a couple of years back but even now was unable to get jobseekers when I was made redundant from my last job because the NI you pay (and you pay MORE of it too) "doesn't count" as one helpful person put it at the jobcenter
 
My first job, was a contract for 10 months (IT related), and I used the umbrella company Parasol, primarily because I could lower the tax I pay by submitting my travel and food expenses.
 
SMN said:
Does anyone contract here / have experience of contracting? I've been headhunted for a contracted role, but it lists "£20 PAYE or £27 LTD" - i'm assuming these are relating to tax, income tax etc but can anyone elaborate a bit further?

From what i can find, LTD is where they pay you more but you have to sort out your own taxes etc whereas PAYE is done for you - but is the PAYE £p/h the post-tax amount?

Thanks in advance.
Click to expand...

Ok well as a LTD they wont pay you a penny more than if you were in an umbrella but being a LTD will give you more tax breaks so you can take home a bit more. If this is your first contract and its a short one, 3-6 months, then just go with an umbrella and so long as you submit a timesheet you dont have to worry about anything. If its a 12 monther or more then i would consider a LTD but go book some time with an accountant to discuss it properly.

I always go through an umbrella becuase im lazy and cant be arsed saving every business related reciept i ever get given over 12 months. You still pay less tax than permy staff so its not as bad as youd think.
 
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