Urgent help re umbrella vs ltd vs paye

musashi10

Hi, I,ve just got a contract for 4 months and I,m starting on Monday. I need to urgently decide on how I get paid.

I have no idea if the job after this will be perm or contract. With this and the contract length in mind, does anyone have any idea on the best method of payment please?

pickpocketlocket

Have a look at the forum on Contractor UK - this question has been discussed many times on there.

InsideInsurance

Offshore umbrella = most money, possibly dodgy legalities, typically irregular payment etc

Ltd = second most money, IR35 considerations and most hassle

Onshore umbrella = least contractor money but least hassle and no legal fears


PAYE = least money but you potentially get holiday pay, sickness etc and may get other employee benefits

As soon as they mention you having an option of being a contractor or PAYE then alarm bells sound and your potentially on dodgy grounds to subsequently claim your outside of IR35 etc

musashi10

Thanks. My concern is mainly, that it is a 4 month contract and I would strive to get a permanent contract thereafter. So I,m weary of paying a firm set fees for a ltd company then not using it after 4 months. On the flip side I may find myself in another contractor role after 4 months. I don,t know what the future holds

InsideInsurance

Which is one of the reasons why contractors get paid more money than perms because of the uncertainty.

On the basis you WANT to go perm and its only a 4 month contract I would possibly be leaning towards umbrella. It isnt expensive to set up a Ltd but there is a fair amount of paperwork and you've then got Professional Indemnity insurance etc to deal with etc.

If you wanted to stay contracting then I'd lean more towards Ltd especially if your outside of IR35.

musashi10

Thanks. I have decided to go limited bevause the company I found is prepared to charge on the basis of the contract length and not annually and with no termination costs.

However, the agency Saudi have to have 1 million indemnity insurance.

Any ideas on who to go through for this and roughly what it costs?

Thanks

InsideInsurance

Depends where in the world your operating, what you're doing etc.

You can get some cheap as chips policies for under £200 but most arent worth the paper they're written on.

Remember PI insurance is written on a claims made basis and so you are only covered if a claim is made during your period of insurance rather than home or motor which is based on the date the incident happens. Therefore it is prudent to keep the insurance running for some time after the termination of your last contract.

Legally they are likely to be able to claim against you for up to 6 years (assuming you are England or Wales based) though personally I would say it is over kill to keep the insurance running that long after ending.

musashi10

Thanks.

Basically I will be working in finance in London.

InsideInsurance

"Finance" is evidently a massive range of roles..... if your simply doing data entry to the GL then the scope for claims is going to be relatively small (unless your dyspraxic)

If you are going to be building a financial business model which will rule all future product pricing then there is evidently more scope for issues and you'd probably want more water tight insurance