Contract working

ljane74

Hi all

I hope you can help.

Ive been out of work since March 2012 after taking redundancy. After 19years at the same company i decided to have a few months off and then get back to looking for work. Its been stressful to say the least. But now, I've been offered a role but its a Contract role for 3 months and maybe more. But i would be employed as a contractor (job found through a recruitment agency). I've been looking through the net and its all rather daunting as to sorting pay out, etc.
My pay is to be £200 per day.
Where do i start - all i keep seeing is ir35, umbrella companies, limited companies and its all blowing my mind and its sort of put a shadow on me finding this job instead of me being happy!!!

Hope someone can help me and where i even start....

Thank you in advance

agrinnall

If your contract is likely to be long term then £200 a day is likely to make the limited company route worth doing, but as you seem to have no idea what to do I would recommend an umbrella company to start with. I would be very surprised if the recruitment agency don't have contacts with an umbrella company, so the easy option would be to go with them. They should be able to explain exactly what they are providing and what you have to do.

prowla

I've previously worked via Parasol (umbrella company, geddit?), who I found to be professional, but not cheap.

If you go via a limited company (very easy and cheap to set up) and get VAT registered and also go for the flat-rate VAT scheme then you may find you get a better return. If you do that then you may need to consider the implications of IR35 and also take out legal insurance against an investigation. I think (IANAL, etc.) that the prospects of being picked up on a £220/day 3-month contract would be extremely low.

The key thing to note about tax in general and IR35 is the difference between tax evasion and tax avoidance; one is illegal and the other isn't (the saying is that the difference between the two is the width of a prison cell wall); the government do try and blur the distinction, but they are wrong.

If you want to get more creative then you can look at other schemes that are available; I know somebody (it wasn't me!) who went via a company that invested in 3rd world debt, and nobody had the faintest clue what was going on.

InsideInsurance

Umbrella is the simpliest solution as you simply become an employee of the umbrella company and they do the rest for you. Needless to say, at the same time it is also the option that gives you the least take home pay

A Ltd is a good middle ground but you then have to decide your split between salary and dividends. If you are outside of IR35 then small salary and large dividends, if you are inside it then you must pay the vast majority as salary, the unfortunate thing is there is no definitive way of saying if you are inside or outside IR35.

The final option is the offshoring options, as per recent press these will certainly give you the biggest income but are of dubious set up, often give irregular payments (to mask the fact it is income) and there is little protection if things go wrong.