Contract Work Pay (PAYE/Umbrella/PLC)

agrinnall

It's pretty unlikely that IT workers will be truly self employed for the reasons explained previously, they will almost all be either working umbrella or limited company. It was that way when I started in IT 35 years ago, and although I'm out of it now there's no reason why it would have changed in the last few years.

Harold_Wren

Sorry that's what I was meaning - there's no point leaving this job because I don't like this umbrella company/Ltd company nonsense as there's a good chance I'd have to do exactly the same for another job.

isplumm

Harold_Wren wrote: »

and only worth it for a longer term job. A workmate in the same role and pay as me currently works through an umbrella company and they take a hefty cut from him which has put me off umbrella companies however aside from getting the fixed costs I don't have a more concrete idea of how much the Ltd company is going to cost.

where I am and the type of work (IT) seems largely self employed anyway.

Hi,

I am an IT contractor & have my own LTD - I pay a minimum of £1.2k accountancy fees per annum ... but still find it better to be a LTD than employed.

It it slightly concerns me that you talk about long term jobs - I tend to have a number of contracts with different companies & they last from 8 weeks upto 2 years.

I would be surprised if any of the people you think are IT self employed actually are - if you have an LTD you are NOT self employed - you will be a director of your LTD.

I have no idea about umbrella - never done it - but some IT contractors use umbrella because no worries about IR35 etc - make sure you pick a legit one - Parasol are meant to be good? Any company saying they will get you 80-90% of gross salary as net - don't believe them - umbrella is closer to 60%. Read http://www.sjdaccountancy.com/about/thinking_of_becoming_a_contractor.html

or

http://www.sjdaccountancy.com/about/ourservices/ltd_vs_umbrella.html

Mark

Harold_Wren

Sorry, I'm using the term self employed incorrectly - I'm meaning basically not being employed by the company or as a temp. I've been in this job for just under a decade as a temp and it's been my sole job, I could be out of work tomorrow but it's likely to keep on going. Would it be a problem to be longterm employed through a Ltd company for the same job?

agrinnall

You are much more likely to be required to comply with IR35 if you have a long term contract (or series of contracts) with a single client. Which would make the advantages of limited over umbrella less tangible. I know people in that situation who do both, although a lot of the limited company users had those companies before the introduction of IR35 when it was pretty much always the best option (in fact, I don't remember umbrella companies existing in those days).

isplumm

Harold_Wren wrote: »

Sorry, I'm using the term self employed incorrectly - I'm meaning basically not being employed by the company or as a temp. I've been in this job for just under a decade as a temp and it's been my sole job, I could be out of work tomorrow but it's likely to keep on going. Would it be a problem to be longterm employed through a Ltd company for the same job?

Hi,

I suspect that you would be inside IR35 by the sounds of it ... but if you went for an umbrella company then you wouldn't need to worry about that - as you are an employee of the umbrella company.

Remember you will be able to claim some expenses under umbrella company - which I assume you can not at the moment.

Mark

isplumm

agrinnall wrote: »

You are much more likely to be required to comply with IR35 if you have a long term contract (or series of contracts) with a single client. Which would make the advantages of limited over umbrella less tangible. I know people in that situation who do both, although a lot of the limited company users had those companies before the introduction of IR35 when it was pretty much always the best option (in fact, I don't remember umbrella companies existing in those days).

Hi

Not sure I quite agree with you here - IR35 is all about Control, Financial Risk, Right of Substitution, No employee benefits.

Just because you have a series of contracts at the same company does not mean you are caught inside IR35.

Try reading http://www.sjdaccountancy.com/about/ir35_advice.html for more info.

Thanks Mark

getmore4less

Single long term real employer via umbrella can restrict expenses.

Talk to the real employer if you think they may want to keep you as chances are if they won't pay more you take the hit.

agrinnall

isplumm wrote: »

Just because you have a series of contracts at the same company does not mean you are caught inside IR35.

Which is why I said it's more likely, rather than saying the OP will be caught. I still think that's the case if working for one client, but as it's nearly 13 years since I was last a contractor I could be out of date on the latest interpretation (and I know there is at least one accountant on the Cutting Tax board who claims that he can always argue that a contract is outside of IR35).

What might be more useful is if the OP told us how much they are earning, as the proportional costs of a limited company on a low rate may make it an uneconomic option.

Latazza

also be aware of the changes coming this April