Umbrella or Ltd?
A lot depends on expenses!
Also you take as much as you want. Sure you can empty your business but you'll pay loads of tax.
Take as much as you need and always stockpile cash.
Permanent to Contracting (IT) - anyone done the move?
- Thread starter lmfy2k
- Start date
Umbrella or Ltd?
A lot depends on expenses!
Also you take as much as you want. Sure you can empty your business but you'll pay loads of tax.
Take as much as you need and always stockpile cash.
so just an update, handed notice in on Friday
had me in today with management (3 of them), saying how bad contracting was and basically wanted to change my mind
anyway they want to take me on as a contractor until end of year as my 4 week notice is too short for them to get a replacement and recruit
they want me to give them a a daily rate so they can compare to market and decide
idea was to leave and have a fresh start, any pointers?
had me in today with management (3 of them), saying how bad contracting was and basically wanted to change my mind
anyway they want to take me on as a contractor until end of year as my 4 week notice is too short for them to get a replacement and recruit
they want me to give them a a daily rate so they can compare to market and decide
idea was to leave and have a fresh start, any pointers?
Be very, very careful as that falls under IR35.
I would personally leave and go elsewhere.
Either that or ask for an extortionate rate to cover IR35. They need you more than you need them, they know this.
thanks for the info mate 
appreciate it,
appreciate it,
This,
You can't leave work on Friday as a permie and start on Monday as a contractor without getting stung by IR35.
The difference isn't insignificant either, they'll have to up the going rate substantially.
Thanks again guys
might as well ask for a fat daily rate that represents both an increase above the offer you've already got and takes into account potential extra tax
if they're unable to replace you so quickly then they should have given you a longer notice period - that is their fault, no need for you to feel guilty
if they're unable to replace you so quickly then they should have given you a longer notice period - that is their fault, no need for you to feel guilty
if i do this, how do i "accept" IR35 so i wont get flagged for investigation?
would it be easier to go via an umbrella as IR35 will not apply, its only until the end of the year.
It all changed quite a bit this year with the budget changes which were implemented in April. Your net take-home will depend on various factors:
How many shareholders (e.g. wife, family etc who can take some)
How much you earn
How much you pay yourself
How much you invest (e.g. crp pension contributions, other investments)
How much you expense through the company
The worse case scenario is a single shareholder (e.g. you as director) paying yourself as much as you can, as you have to pay a combination of corporation tax, income tax and some national insurance contributions.
Let's say your gross is £100k pa, with the 14/15 tax rules you could pay yourself say £8k salary tax free and about £30'something K net in dividends with no personal income tax burden. Your corp tax bill would be approx. £18,400 worse case scenario (assuming no other expenses than your salary). The dividends doesn't reduce your corp tax unfortunately (but pension contributions do).
So if you paid yourself say £3k/mo in dividends, totally a net income of approx. £3660 per month, you'd end up with the above corp tax bill and about £40k left in the company to do what you wish with.
If you chose to pay yourself beyond the higher rate dividends threshold then you would have to pay income tax on it (which stings)..
So that was 14/15.. unfortunately now it's a fair bit worse with 16/17.. you get taxed on all dividends over £5kpa.. Without going into the detail too much, on the 100k scenario above, you'd be about 4-5k per year worse off with the new tax rules.
I'm getting absolutely raped by the tax man at the moment with a combined £50k of corp and personal tax bills each year.. but I may adjust that with some finance arrangements as it may work out cheaper in the long run..
All part of the fun.. and why a good accountant is crucial..
I'd take the short term contract until you find something else. Get them to stick you on 14 day notice too. I wouldn't worry too much about IR35 stuff as it's generally a grey area anyway and you'd be pretty unlucky to get investigated. Worst case scenario is you have to pay some more tax, so maybe factor that in.
Whether it's worth it is down to personal circumstances. I certainly won't be going perm any time soon and my rate keeps going up (although I'm dropping £25/day to cut a 175 mile round trip to 2 miles).
Look for three things as a contractor:
1) Day rate
2) Job satisfaction
3) Commute/distance
You will be unlikely to get all three, which of the others you deem most important comes down to what you're wanting to achieve. I had 1 and 3 at my last job, but left as I was working with incompetent muppets and the job itself didn't tickle my fancy, so I handed in my notice and left. From my friends that are still there, it's got worse.
Look for three things as a contractor:
1) Day rate
2) Job satisfaction
3) Commute/distance
You will be unlikely to get all three, which of the others you deem most important comes down to what you're wanting to achieve. I had 1 and 3 at my last job, but left as I was working with incompetent muppets and the job itself didn't tickle my fancy, so I handed in my notice and left. From my friends that are still there, it's got worse.
Just out of curiosity, how old are/were most people when they went down the contracting road? I'm 28 and currently do 2nd line (permanent) and have no intention of leaving yet until I have some certs from Microsoft (heading towards Office 365/Exchange based work) and the appropriate experience, but the appeal is there down the line.
You don't need certs, they help, but I was on over £450 a day without bits of paper.
I was 30 when I started.
Cheers, much appreciated.
I take your point and experience is often the way to go, but at 2nd line level I naturally don't get to do the 3rd line stuff without knowing a thing or two. Currently doing MCSA O365 and just breaking stuff on my own with a demo tenant at home
I was 29 when I switched to contract work. You need a good few years experience under your belt.
I started when I was 26/27.
This may be something worth bearing in mind:
I started my IT career in 1996, between then and 2004 I had the following job types (in chronological order, oldest first):
Telephone support
Field Engineer
Systems Administrator
Systems Engineer
Senior Engineer
Technical Architect
Now since 2004 I have had various contracts but they are all basically architects, although sometimes they have BS titles like analysts.. but now, 12 years later, I am still an architect (albeit a lead one for a large firm).
Point is, you can see my first eight years there is a logical progression in roles, climbing the ladder so to speak, and since contracting i've been at the same rung on the ladder more or less (it is quite a way up the ladder though).. You get hired for a specific role and you tend to stick at that.. you only usually get hired for a role you are competent at, not roles you aspire to do.. There is a bit of flexibility with this though, it's not set in stone.. And if you make a name for yourself in a big firm there's always the possibility to convert to perm in a more senior role (in my case it would be a head of department)..
Will not progressing up the ladder career-wise be OK for *you*?
This may be something worth bearing in mind:
I started my IT career in 1996, between then and 2004 I had the following job types (in chronological order, oldest first):
Telephone support
Field Engineer
Systems Administrator
Systems Engineer
Senior Engineer
Technical Architect
Now since 2004 I have had various contracts but they are all basically architects, although sometimes they have BS titles like analysts.. but now, 12 years later, I am still an architect (albeit a lead one for a large firm).
Point is, you can see my first eight years there is a logical progression in roles, climbing the ladder so to speak, and since contracting i've been at the same rung on the ladder more or less (it is quite a way up the ladder though).. You get hired for a specific role and you tend to stick at that.. you only usually get hired for a role you are competent at, not roles you aspire to do.. There is a bit of flexibility with this though, it's not set in stone.. And if you make a name for yourself in a big firm there's always the possibility to convert to perm in a more senior role (in my case it would be a head of department)..
Will not progressing up the ladder career-wise be OK for *you*?