Becoming a contractor - advice needed

timborules

Hi All,

I'm currently employed by a UK Joint Venture LLP, 50% of which is owned by a US entity. The JV is ending and the US firm wish to employ me 100% in another capacity, working remotely from the UK. Good news.

However - I'm getting lots of different advice on how to set-up. Quite simply, the US firm will pay me to the gross salary as I invoice it on a monthly basis and will leave me to deal with local tax arrangements (they employ a whole variety of staff globally in this way).

This is likely to be a permanent arrangement (so to speak), rather than a 6 months contract, for example.

What options do I have? I'm pretty sure a colleague of mine simply invoices, gets paid, does tax return (minus genuine tax deductible expenses) via an accountant. However, I have heard of the options of doing this through an umbrella company or setting up my own Ltd company.

I'm not bad with numbers/everyday finances but this area has me flummoxed! Help!

Thanks!

Carl31

Ltd company would be the way to go, but might be a bit of a minefield if you dont know how it works. Umbrella is OK, but there is better tax benefits from a LTD co, but you could be subject to IR35 restrictions, depending on how your arrangement is set up

Might be worth looking for a company that specialises in contractor payroll, there are loads around, they can manage the umbrella or ltd co for you, for a fee, but they should ensure you benefit most from a tax perspective

timborules

Thanks!

Looking at IR35 issues, it looks like I fall inside IR35 - I am effectively a normal employee and the Company will consider and treat me as such, just legally cannot be employed due to my location.

My salary will be fixed (with incentive bonus), no holiday/sick pay/other staff and I'll have the usual performance metrics as if I were permanently employed.

Looking at it this way - does PAYE umbrella make more sense? Especially if I can get them to pay the fees (should I budget £100-£150 per month?)

Thanks again!

Carl31

timborules wrote: »

Thanks!

Looking at IR35 issues, it looks like I fall inside IR35 - I am effectively a normal employee and the Company will consider and treat me as such, just legally cannot be employed due to my location.

My salary will be fixed (with incentive bonus), no holiday/sick pay/other staff and I'll have the usual performance metrics as if I were permanently employed.

Looking at it this way - does PAYE umbrella make more sense? Especially if I can get them to pay the fees (should I budget £100-£150 per month?)

Thanks again!

IR35 will only apply if you use a PSC - Personal service company, ie set up a company, then make yourself an employee of that company as well as taking a dividend, it has nothing to do with the client company (paying your invoices)

You wont have a salary, you will charge a fee

If you use an umbrella, the umbrella will charge the client, and you will be taxed under PAYE, but you can claim some work related expenses, like subsistence and some travel costs. Umbrella companies usually charge a % of your weekly/monthly invoices - this might be the simplest route for you, how long are you intending on this arrangement lasting, as that will affect your position too

Carl31

Google paystream, I think it will be best if you use someone like that, if you contact them, they will call you and talk you through it

timborules

It's a permanent on going scenario, as if it were a permanent full time employment contract.

Carl31

Ok, well bear in mind if you contract for the same company for over 24 months it will affect your expenses you can offset against your tax, as you could be deemed to be employed. Might be worth considering this with regards to your client