Tax - leaving current job and one-off contract

Demerara

I am leaving my current job and will not be in employment for a while. I have been given a one-off contract by a different organisation. Usually, they would pay my employer and then my employer would pay me after the usual deductions. However, since I am leaving, this leaves me in a pickle.

Any suggestions as to how I can be paid for a one-off contract? From my research, it is not worth registering as self-employed since this is going to be a one-off.

Grumpy_chap

Demerara said:

I am leaving my current job and will not be in employment for a while. I have been given a one-off contract by a different organisation. Usually, they would pay my employer and then my employer would pay me after the usual deductions. However, since I am leaving, this leaves me in a pickle.

Any suggestions as to how I can be paid for a one-off contract? From my research, it is not worth registering as self-employed since this is going to be a one-off.

Have you confirmed that taking this work directly is not in conflict with the terms of employment at the current job?

In terms of how to be paid, the options are quite likely yo be restricted by what the organisation are willing to administer.  It can be difficult for large companies to bring a contractor onto their supply-chain for a one-off, so they may well set out options from the following:

1. You work as self employed (sole-trader).  
2. You set up your own Ltd Co.
3. You are taken on as a short-term contract as employee of the organisation.
4. You work via an Agency
5. You work via an Umbrella Company

In working out your rate for this work, you need to consider that you may need insurances in place, you need to cover the equivalent of annual leave etc., you may need to cover employer as well as employee NI, you need to cover personal taxation and any corporate tax that is applicable.

Demerara

Grumpy_chap said:

Demerara said:

I am leaving my current job and will not be in employment for a while. I have been given a one-off contract by a different organisation. Usually, they would pay my employer and then my employer would pay me after the usual deductions. However, since I am leaving, this leaves me in a pickle.

Any suggestions as to how I can be paid for a one-off contract? From my research, it is not worth registering as self-employed since this is going to be a one-off.

Have you confirmed that taking this work directly is not in conflict with the terms of employment at the current job?

In terms of how to be paid, the options are quite likely yo be restricted by what the organisation are willing to administer.  It can be difficult for large companies to bring a contractor onto their supply-chain for a one-off, so they may well set out options from the following:

1. You work as self employed (sole-trader).  
2. You set up your own Ltd Co.
3. You are taken on as a short-term contract as employee of the organisation.
4. You work via an Agency
5. You work via an Umbrella Company

In working out your rate for this work, you need to consider that you may need insurances in place, you need to cover the equivalent of annual leave etc., you may need to cover employer as well as employee NI, you need to cover personal taxation and any corporate tax that is applicable.

Thanks @grump@Grumpy_chap for the very detailed reply.

Yes, i did it once before ... but now I am leaving .. so need to find an alternative for payment.

Regarding being self-employed and Ltd.Co. Is this worth it when it is only for a one off contract ? I understand i will have to complete all the paperwork get separate business account etc.

Short-term contract - unfortunately, I don't think they'd be willing to do this.

I did look at working via an umbrella agency. Would an umbrella company register me for a one-off contract though?

SensibleSarah

If you're sure it's a one-off contract then I would probably go the sole trader route - as you don't need to do much admin for that and yes, you'd have to tell HMRC and do one self-assessment tax return for what you bring in from this contract, but you definitely don't need a seperate business bank account just for this one short contract - just make sure you document exactly what you were paid and when. 

Grumpy_chap

Demerara said:

Regarding being self-employed and Ltd.Co. Is this worth it when it is only for a one off contract ? 

Probably not, I'd say definitely not Ltd Co. for a one-off.

The employer won't offer a short-term staff contract.

That leaves you with Sole-Trader or Agency / Umbrella.
If you wish to avoid any administration, then Umbrella.

I suspect that the Umbrella Companies will accept a one-off contract but you don't actually have to tell them.

Out of interest, how long is the one-off contract likely to run and what sort of earnings will you make from it?  I don't ask to pry but if the earnings are less than £1k you may be able to consider the trading allowance which would make sole-trader simple:
https://www.gosimpletax.com/blog/trading-allowance-should-you-claim-it

Demerara

Thanks @SensibleSarah and @Grumpy_chap

The one-off contract doesn't have a fixed timescale, rather it is about completing a set of tasks over the course of the next few months. It will be more than 1k.

I saw something around one-off contracts and declaring the income as "other income", and then do a self-assessment. Would this apply here?

Grumpy_chap

For work over a period of a few months, this would fit into the Umbrella Company model quite well - they usually charge their fees on a "per week" basis.

The other alternative would appear to be Sole-Trader.