Can I convince my employer to become a contractor from FTE?

CrowCrow

Permie Friday, Contractor Monday at same company. Yeah taxman is going to eat you alive.

If you want to become a contractor resign and find a new client.

theoretica

My company accepted a few people for voluntary redundancy and then they have been back as contractors. However, they are only seen when specifically needed - so maybe a few months every few years, or a few weeks a year. Most roles have some parts which are easier to replace than others.

isplumm

Skag wrote: »

I am a full-time employee, and I am thinking of asking my employer to become a contractor on a daily rate.
This is solely because contracting brings home more money (I know about unpaid holiday etc).

Is this common practice or something that people do?

I would suggest that HMRC would see this as a tax dodge .... going from full time employee for a company to setting up a LTD company to do work for the same company.

Mark

Prothet_of_Doom

Google "HMRC IR35 employment tests" or just IR35

Basically HMRC will throw the book at you if you walk out of a company on Friday as an Employee and Walk back in on Monday as a self-employed contractor.

But don't let that stop you investigating the possibility of self employment.

I'm a contractor and have been doing it via my own ltd company for nearly 7 years. I reckon I'm earning double what I did when i was a permie, but I've had to move around and take the risks of voids and lack of sick and holiday pay.

MataNui

I doubt your employer would go for it. Also as posters have said its unlikely you would actually be better off.

Your situation would definitely be covered by IR35 meaning you would be liable for paying employers and employees NI and tax on the FULL payment (not just what you choose to salary yourself). If you didnt declare so in your tax return you would also (if found out and you would be eventually) be liable for a bankrupting fine and interest on what you avoided paying.

I moved from contracting to perm work. Ways to ensure you dont get caught by IR35 is a common topic of conversation among contractors (its that much of a problem). You wont be able to do any of them.

motorguy

antrobus wrote: »

People do it. You need a limited company. The government doesn't really like it and is always trying to crack down on what it sees as 'tax avoidance'.

What's in it for your employer?

People become contractors yes, thats common practice (i'm one!) however its not common practice for an employer to allow employees to suddenly become contractors for them.

motorguy

Skag wrote: »

I believe I didn't put it quite right. So, if I were to put forward my resignation, and the company still needs me, should I ask them to cancel my existing contract and go on a contract basis? Now, is this something people do? I'm not talking about converting my existing contract.

What notice do you have to work?

Why would a company keep you on for a year as a contractor? I cant think of any employee i've had that i couldnt replace in three months.

In fact i cant think of any employee i've had that if they didnt turn up in the morning, the business would suddenly fall apart.

If you want to become a contractor, become a contractor. If your previous employer happens to be your first contract (which is extremely rare) then grand. I wouldnt do it on the basis of "hoping" the company keeps you on as a contractor - you might be in for an unpleasant shock.

Dynamoaccounts

HappyMJ wrote: »

If your client tells you to be on site at 8am every morning whether there is work or not then tells you what to do and when and provides the tools then it's unlikely you will be considered self employed. If you're working through your own limited company then it's likely you will be caught by IR35 and you will have to pay tax as if you are employed and it won't save anything.

This isn't necessarily the case, IR35 can be navigated with a compliant B2B contract and also working arrangements. We have template IR35 friendly contracts that use for clients and a review by someone like QDOS would give assurance that you're outside. The main issue however is moving from permie employment one day to contractor the next with the same company. Was quite a common thing a few years ago but there are now provisions within the legislation to cover it. Basically, if caught then would be reassessed as though the employment had continued. You/d need a break of a few months between ceasing as an employee and starting as a contractor.

If contracting is the route you'd prefer to go down, get the company all set up, get into the agencies and start touting for business. Once you've a contract in place, resign and move into the contracting world. :T:beer:

ScorpiondeRooftrouser

Surprised nobody has asked whether your company already employs contractors and on what basis.

If they do then there's a very good chance they'd hire you rather than someone else. If they never hire contractors, it's unlikely.