Moving into consultancy/interim

[FortuitousFluke]

Evening chaps, Happy New Year and all that. I'm looking for a bit of advice from thems what know. I'm currently working in London as a Procurement Business Partner earning about £40k p/a but with a CARE pension which is a big addition.

In the new year I should finally be MCIPS qualified which is quite a big thing for those in the industry and I'm giving some consideration to moving into contracting, working on an interim basis. The main draw being that if I can achieve £300/£350 as a day rate (think I should be able to but will do some checking as stage one) my take home will be the equivalent of a salary of about £70-80k.

I'm going to start talking to a few recruitment consultants I work with to get some ideas. Difficulty is this would be a big step and one that I have no experience of, and would likely involve setting myself up as a business and getting an accountant etc.

Are there any folks around who have done similar who can offer any pearls of wisdom, things to consider, words of encouragement or warning? Any discussion would be really useful as I am keen to start the next step of my career.

 

[ahar]

Definitely worth looking through contractor UK forums. Lots of very knowledgeable people.

There's lots to think about but two key ones when thinking about how much you'll earn. VAT, and putting money aside for those periods you're between contacts.

You should plan on working 230 days a year (holidays, sickness, Christmas are not paid remember), and put a chunk aside each month for those times looking for a contract. The company I'm doing work for at the moment have an enforced 3 week furlough for contractors over Christmas for example.

The requirement to register for VAT starts at 82k I seem to remember - if you earn over this, you may see 20% of your cash go to the government before you've paid other taxes!

I'm not a contractor but my wife is, and I work with loads who are - if you get it right the flexibility, extra money and lack of corporate crap can make it really worth it.

 

[Mr^B]

I used the following forum to ask questions when I was looking into the world of contracting - in general they're very helpful;

https://forums.contractoruk.com/

Theme for advice for new people starting out contracting is;

1. Get a warchest
2. Expect every contract to terminate immediately, and have large enough warchest for at LEAST 6 months of bench time.
3. Don't forget medical cover, pension, critical illness insurance, etc
4. Get a warchest.

It also depends if you like that sort of role - moving around a lot, often getting the thin end of the wedge with regards to choosing what you do and for whom (depending on your skillset and the demands for it). Recruitment agents for contracting are just as bad as they are for permanent hires.

 

[dowie]

The requirement to register for VAT starts at 82k I seem to remember - if you earn over this, you may see 20% of your cash go to the government before you've paid other taxes!

AFAIK this is something you generally add on top of a daily rate rather than take a hit on yourself, especially if the client is VAT registered too... thought there are no doubt plenty of exceptions and situations where workarounds need to be found.

 

[Jokester]

Aye, make sure you state your rate excludes VAT.

 

[FortuitousFluke]

Thanks for all the replies so far, I'll take a look at the suggested forums as part of my due diligence. Realistically I won't be in a position to start moving forward properly until February at the earliest.

The main issue seems to be around creating a bank. I'm not really in a stable position in terms of this at the moment, having said that my contract is so favourable at the moment that I think my notice period is around 1 week. With that in mind even though I'd be starting with no parachute in place I'm considering looking for longer term contracts, 9-12 months first off, with the understanding that I basically don't need to leave my current job until I have something tied down. I'd still have the risk of the contract being pulled but no downtime prior to starting to worry about. The wage increase would allow me to put aside 50-100% of my current earnings each month meaning i could have the 6 month bank (based on my current salary) within the life of a 9 month contract, and even if I did end up with downtime a £1k p/a take home job would keep me basically afloat.

In terms of VAT the advice is really helpful as I hadn't considered that aspect of setting up a LTD. Having said that if it looks like a contract might tip me over I could look at potentially using an umbrella company to pay tax instead, reduces the wages but avoids the VAT issue I think (more research needed).

Like I said thanks for all the replies so far. Will keep people posted on the journey if I go ahead as others may find it useful.