Jump to a ltd company

monkey-fingers

I think I mentioned it on the other thread, but I'll add it here too.

If you have no reason to have a Ltd company, don't! It's a PITA.

I was in a similar situation. Once I won an outside IR35 contract, I setup the Ltd company. It took around half an hour, maybe 40 minutes. Then the fun begins. 3 months later, I still don't have my VAT setup properly.

The majority of contracts are inside IR35 now, so you don't need a Ltd. If you're going to limit yourself to outside IR35 only, expect 6-12 months of unemployment regularly.

Fedcas65

monkey-fingers said:

I think I mentioned it on the other thread, but I'll add it here too.

If you have no reason to have a Ltd company, don't! It's a PITA.

I was in a similar situation. Once I won an outside IR35 contract, I setup the Ltd company. It took around half an hour, maybe 40 minutes. Then the fun begins. 3 months later, I still don't have my VAT setup properly.

The majority of contracts are inside IR35 now, so you don't need a Ltd. If you're going to limit yourself to outside IR35 only, expect 6-12 months of unemployment regularly.

Could you have issued invoices without the VAT?

In other words, did you start working or did you need to wait for the VAT resolution?

I assume that you were expecting to generate enough money to require the VAT, but I'm curious if you started working or if you delayed the contract start.

Inside IR35 contracts in my field are not so great, they're not paid well and those umbrella companies are very weird...

Anyway, my point was that at the same day rate, outside IR35 is better and by far, I believe you when you say that there aren't many outside IR35 contracts, I barely find them...
The problem is what happens if I have the company open but I find a contract inside IR 35, it will just complicate my accountancy...

monkey-fingers

Fedcas65 said:

monkey-fingers said:

I think I mentioned it on the other thread, but I'll add it here too.

If you have no reason to have a Ltd company, don't! It's a PITA.

I was in a similar situation. Once I won an outside IR35 contract, I setup the Ltd company. It took around half an hour, maybe 40 minutes. Then the fun begins. 3 months later, I still don't have my VAT setup properly.

The majority of contracts are inside IR35 now, so you don't need a Ltd. If you're going to limit yourself to outside IR35 only, expect 6-12 months of unemployment regularly.

Could you have issued invoices without the VAT?

In other words, did you start working or did you need to wait for the VAT resolution?

I assume that you were expecting to generate enough money to require the VAT, but I'm curious if you started working or if you delayed the contract start.

Inside IR35 contracts in my field are not so great, they're not paid well and those umbrella companies are very weird...

Anyway, my point was that at the same day rate, outside IR35 is better and by far, I believe you when you say that there aren't many outside IR35 contracts, I barely find them...
The problem is what happens if I have the company open but I find a contract inside IR 35, it will just complicate my accountancy...

It's more complicated than earning enough to pay VAT. I won't be hitting the threshold this tax year. But it means I claim back VAT on everything (from insurance to accountants and anything else - including setup costs and computing/phone costs - if you're being provided a laptop, chances are, you shouldn't be Outside IR35).
My accountant explained all the benefits - and there are no downsides other than having to do a return, which is really simple. Any agency you work through will be expecting to get a VAT receipt. They don't care - they pass it onto the client, who in turn claims it back.

Of course Outside IR35 is preferable, but most contracts aren't outside IR35. If you provide any kind of support services, chances are you should be inside. And HMRC do like to come after people that are "employee like" (i.e. replacing something that an employee would normally do).

I'm a true "consultant' in that I provide services to clients who aren't mature in certain IT areas. I come in, show them how they should be doing it (and audit as I go along, providing them with formal feedback). Often, I'll help them bring people in to do the "day-to-day" job, helping with interviews and such like.

I do my bit and move along. I've been doing this for 20 years, but previously for a large company that offered consulting services.

If you do decide to go down the Ltd company (as above, don't bother setting it up until you have clients), I'd heavily recommend Tech Accounting. I've no link to them other than a customer, but they're specialists in IT Contractors.

Fedcas65

monkey-fingers said:

Fedcas65 said:

monkey-fingers said:

I think I mentioned it on the other thread, but I'll add it here too.

If you have no reason to have a Ltd company, don't! It's a PITA.

I was in a similar situation. Once I won an outside IR35 contract, I setup the Ltd company. It took around half an hour, maybe 40 minutes. Then the fun begins. 3 months later, I still don't have my VAT setup properly.

The majority of contracts are inside IR35 now, so you don't need a Ltd. If you're going to limit yourself to outside IR35 only, expect 6-12 months of unemployment regularly.

Could you have issued invoices without the VAT?

In other words, did you start working or did you need to wait for the VAT resolution?

I assume that you were expecting to generate enough money to require the VAT, but I'm curious if you started working or if you delayed the contract start.

Inside IR35 contracts in my field are not so great, they're not paid well and those umbrella companies are very weird...

Anyway, my point was that at the same day rate, outside IR35 is better and by far, I believe you when you say that there aren't many outside IR35 contracts, I barely find them...
The problem is what happens if I have the company open but I find a contract inside IR 35, it will just complicate my accountancy...

It's more complicated than earning enough to pay VAT. I won't be hitting the threshold this tax year. But it means I claim back VAT on everything (from insurance to accountants and anything else - including setup costs and computing/phone costs - if you're being provided a laptop, chances are, you shouldn't be Outside IR35).
My accountant explained all the benefits - and there are no downsides other than having to do a return, which is really simple. Any agency you work through will be expecting to get a VAT receipt. They don't care - they pass it onto the client, who in turn claims it back.

Of course Outside IR35 is preferable, but most contracts aren't outside IR35. If you provide any kind of support services, chances are you should be inside. And HMRC do like to come after people that are "employee like" (i.e. replacing something that an employee would normally do).

I'm a true "consultant' in that I provide services to clients who aren't mature in certain IT areas. I come in, show them how they should be doing it (and audit as I go along, providing them with formal feedback). Often, I'll help them bring people in to do the "day-to-day" job, helping with interviews and such like.

I do my bit and move along. I've been doing this for 20 years, but previously for a large company that offered consulting services.

If you do decide to go down the Ltd company (as above, don't bother setting it up until you have clients), I'd heavily recommend Tech Accounting. I've no link to them other than a customer, but they're specialists in IT Contractors.

Thank you also for this message.

What do you mean by "the HMRC do like to come after people that are "employee like" (i.e. replacing something that an employee would normally do)".
It's way too easy to end up doing things that an employee can do, think about a software developer for example, he can be both inside and outside IR35 in my understanding, despite the company already has a development team.

You seem to be a doing a proper consultancy job, though it may not be my specific case, or not with every contract, I can't think of many contract available for positions as such, especially in this period.
So would you say that I can't accept just any of contract based on the tasks required? Or  whatever "service" required? Shall I check the contract between the parties for their expectations? It seems though, I thought that this was based on trust and moreover on evaluation. I mean, I still need to do interviews with the clients, right? So, they would know if I can deliver what they need or not...

I may have skipped the step where I can apply for a UK VAT registration even if I don't satisfy the mandatory requirements, I'll certainly do that if I ever open the company, thank you.

monkey-fingers

Sorry, I missed one of the points you asked.

Yes, it takes a couple of weeks for the VAT number to come through. It's not an issue - you can issue invoices without VAT and then backdate them and send new ones once you have a VAT number.

Many outside IR35 contracts are setup like Business to Business (B2B). This means they're often paid monthly, and 30 days in arrears from invoicing. So if you started on the 1st January, you could well find that if you invoice on 31st January that you don't get paid until a few days into March!

I think you're thinking that these outside IR35 jobs are like getting a normal job, but with some risk and well-paid. It's not like that at all.

And talking about dividends.... the way most Ltds work is that you pay yourself a small untaxed wage (£12,500 or whatever your tax code is). The rest of the money your Ltd company takes is taxed at up to 25% in corporation tax. So even if you leave the money in the Ltd company and don't take any dividends, you'll still pay this.

Dividend tax is currently 8.5%, although it goes up to 10.5% in April. That's for the first £37,770. Then it's 33.75% above (shortly to be 35.75%)

Here: I'll give you some basic numbers which don't include any pension contributions.

£500 day rate for 220 days per annum.
Company income: £110,000

I'll assume £3000 in expenses
£12,500 in wages (as above)
£1,126 in employers NI

Company profit: £93,373
Corporation tax: £20,994

The company now has £72,379 to pay out.
You'll actually pay £14,959 in Dividend tax after that.

Giving you a total take home of £57,420 + £12,500 = £70k-ish.

The way you were looking at it on the other thread was thinking like PAYE and you've missed a pile of other things like employers NI and expenses.

You're about £5k a year better off doing it the above way ^

Fedcas65

monkey-fingers said:

Sorry, I missed one of the points you asked.

Yes, it takes a couple of weeks for the VAT number to come through. It's not an issue - you can issue invoices without VAT and then backdate them and send new ones once you have a VAT number.

Many outside IR35 contracts are setup like Business to Business (B2B). This means they're often paid monthly, and 30 days in arrears from invoicing. So if you started on the 1st January, you could well find that if you invoice on 31st January that you don't get paid until a few days into March!

I think you're thinking that these outside IR35 jobs are like getting a normal job, but with some risk and well-paid. It's not like that at all.

And talking about dividends.... the way most Ltds work is that you pay yourself a small untaxed wage (£12,500 or whatever your tax code is). The rest of the money your Ltd company takes is taxed at up to 25% in corporation tax. So even if you leave the money in the Ltd company and don't take any dividends, you'll still pay this.

Dividend tax is currently 8.5%, although it goes up to 10.5% in April. That's for the first £37,770. Then it's 33.75% above (shortly to be 35.75%)

Here: I'll give you some basic numbers which don't include any pension contributions.

£500 day rate for 220 days per annum.
Company income: £110,000

I'll assume £3000 in expenses
£12,500 in wages (as above)
£1,126 in employers NI

Company profit: £93,373
Corporation tax: £20,994

The company now has £72,379 to pay out.
You'll actually pay £14,959 in Dividend tax after that.

Giving you a total take home of £57,420 + £12,500 = £70k-ish.

The way you were looking at it on the other thread was thinking like PAYE and you've missed a pile of other things like employers NI and expenses.

You're about £5k a year better off doing it the above way ^

About the kind of job, is it a legal requirement or just what you believe it should be the line of work?
I mean, are you saying that if there is an employee doing a certain job, then the company can't hire a contractor outside IR35 for the same job?
What if he's assigned to that for a certain percentage of his time?

I've seen many contractors along the way, but I've never questioned how they worked there, despite they were doing almost all my tasks.
Though I've seen partners (companies hired by employer) doing something slightly different, and they had their own clients, so that's a bit different but I could have done it too if I had the same client list...
This conversation becomes a bit redundant when it comes to tasks and responsibilities...
I also don't think that you need to deliver what you contract on in IT, you're not delivering a project like the drawing of a house etc, there is an immense grocery list usually and I'm absolutely sure that it will never be in the contract, it's just impossible to put everything there, plus there will be many blockers along the way, which usually require a contract extension, the hire of other contractors or even employees, and probably more often than not, the entire project fails.

At some point I considered the saving in NI with a ltd company, that was very important for me, and I get access to the same "state pension" when it will be the time.

monkey-fingers

Fedcas65 said:

monkey-fingers said:

Sorry, I missed one of the points you asked.

Yes, it takes a couple of weeks for the VAT number to come through. It's not an issue - you can issue invoices without VAT and then backdate them and send new ones once you have a VAT number.

Many outside IR35 contracts are setup like Business to Business (B2B). This means they're often paid monthly, and 30 days in arrears from invoicing. So if you started on the 1st January, you could well find that if you invoice on 31st January that you don't get paid until a few days into March!

I think you're thinking that these outside IR35 jobs are like getting a normal job, but with some risk and well-paid. It's not like that at all.

And talking about dividends.... the way most Ltds work is that you pay yourself a small untaxed wage (£12,500 or whatever your tax code is). The rest of the money your Ltd company takes is taxed at up to 25% in corporation tax. So even if you leave the money in the Ltd company and don't take any dividends, you'll still pay this.

Dividend tax is currently 8.5%, although it goes up to 10.5% in April. That's for the first £37,770. Then it's 33.75% above (shortly to be 35.75%)

Here: I'll give you some basic numbers which don't include any pension contributions.

£500 day rate for 220 days per annum.
Company income: £110,000

I'll assume £3000 in expenses
£12,500 in wages (as above)
£1,126 in employers NI

Company profit: £93,373
Corporation tax: £20,994

The company now has £72,379 to pay out.
You'll actually pay £14,959 in Dividend tax after that.

Giving you a total take home of £57,420 + £12,500 = £70k-ish.

The way you were looking at it on the other thread was thinking like PAYE and you've missed a pile of other things like employers NI and expenses.

You're about £5k a year better off doing it the above way ^

About the kind of job, is it a legal requirement or just what you believe it should be the line of work?
I mean, are you saying that if there is an employee doing a certain job, then the company can't hire a contractor outside IR35 for the same job?
What if he's assigned to that for a certain percentage of his time?

I've seen many contractors along the way, but I've never questioned how they worked there, despite they were doing almost all my tasks.
Though I've seen partners (companies hired by employer) doing something slightly different, and they had their own clients, so that's a bit different but I could have done it too if I had the same client list...
This conversation becomes a bit redundant when it comes to tasks and responsibilities...
I also don't think that you need to deliver what you contract on in IT, you're not delivering a project like the drawing of a house etc, there is an immense grocery list usually and I'm absolutely sure that it will never be in the contract, it's just impossible to put everything there, plus there will be many blockers along the way, which usually require a contract extension, the hire of other contractors or even employees, and probably more often than not, the entire project fails.

At some point I considered the saving in NI with a ltd company, that was very important for me, and I get access to the same "state pension" when it will be the time.

It's quite clear really.

An outside IR35 will be a set of deliverables. For instance, build a website that is capable of X Y and Z.
Often, these aren't necessarily time based. So you might get a daily rate plus project milestone bonuses.

You'll be working mostly alone, but possibly alongside a Project Manager.

It's not repeatable tasks, it's a one-off.

An inside IR35 is similar to an employee. They're often on extendable contracts that can go on for years (in some cases). For instance, I worked with a technical architect who was there for 9 years. That's extreme, but he was effectively doing a job that a company would expect to have an employee doing.

If the contractors you were working with previously were doing stuff alongside yourself as a permanent employee (and as you said, your job), they'd definitely be inside IR35. I wouldn't expect many developers, DBAs or even support staff to be outside.

Pick the wrong one, and HMRC will be after you.

Fedcas65

monkey-fingers said:

Fedcas65 said:

monkey-fingers said:

Sorry, I missed one of the points you asked.

Yes, it takes a couple of weeks for the VAT number to come through. It's not an issue - you can issue invoices without VAT and then backdate them and send new ones once you have a VAT number.

Many outside IR35 contracts are setup like Business to Business (B2B). This means they're often paid monthly, and 30 days in arrears from invoicing. So if you started on the 1st January, you could well find that if you invoice on 31st January that you don't get paid until a few days into March!

I think you're thinking that these outside IR35 jobs are like getting a normal job, but with some risk and well-paid. It's not like that at all.

And talking about dividends.... the way most Ltds work is that you pay yourself a small untaxed wage (£12,500 or whatever your tax code is). The rest of the money your Ltd company takes is taxed at up to 25% in corporation tax. So even if you leave the money in the Ltd company and don't take any dividends, you'll still pay this.

Dividend tax is currently 8.5%, although it goes up to 10.5% in April. That's for the first £37,770. Then it's 33.75% above (shortly to be 35.75%)

Here: I'll give you some basic numbers which don't include any pension contributions.

£500 day rate for 220 days per annum.
Company income: £110,000

I'll assume £3000 in expenses
£12,500 in wages (as above)
£1,126 in employers NI

Company profit: £93,373
Corporation tax: £20,994

The company now has £72,379 to pay out.
You'll actually pay £14,959 in Dividend tax after that.

Giving you a total take home of £57,420 + £12,500 = £70k-ish.

The way you were looking at it on the other thread was thinking like PAYE and you've missed a pile of other things like employers NI and expenses.

You're about £5k a year better off doing it the above way ^

About the kind of job, is it a legal requirement or just what you believe it should be the line of work?
I mean, are you saying that if there is an employee doing a certain job, then the company can't hire a contractor outside IR35 for the same job?
What if he's assigned to that for a certain percentage of his time?

I've seen many contractors along the way, but I've never questioned how they worked there, despite they were doing almost all my tasks.
Though I've seen partners (companies hired by employer) doing something slightly different, and they had their own clients, so that's a bit different but I could have done it too if I had the same client list...
This conversation becomes a bit redundant when it comes to tasks and responsibilities...
I also don't think that you need to deliver what you contract on in IT, you're not delivering a project like the drawing of a house etc, there is an immense grocery list usually and I'm absolutely sure that it will never be in the contract, it's just impossible to put everything there, plus there will be many blockers along the way, which usually require a contract extension, the hire of other contractors or even employees, and probably more often than not, the entire project fails.

At some point I considered the saving in NI with a ltd company, that was very important for me, and I get access to the same "state pension" when it will be the time.

It's quite clear really.

An outside IR35 will be a set of deliverables. For instance, build a website that is capable of X Y and Z.
Often, these aren't necessarily time based. So you might get a daily rate plus project milestone bonuses.

You'll be working mostly alone, but possibly alongside a Project Manager.

It's not repeatable tasks, it's a one-off.

An inside IR35 is similar to an employee. They're often on extendable contracts that can go on for years (in some cases). For instance, I worked with a technical architect who was there for 9 years. That's extreme, but he was effectively doing a job that a company would expect to have an employee doing.

If the contractors you were working with previously were doing stuff alongside yourself as a permanent employee (and as you said, your job), they'd definitely be inside IR35. I wouldn't expect many developers, DBAs or even support staff to be outside.

Pick the wrong one, and HMRC will be after you.

Thanks for this message.

Repeatable tasks are everywhere though, it would be the case from at least more than one point of view, if the HMRC focus heavily on that, it can always identify me always inside IR35.
Obviously now that I know that, I'd try do not do such things, but it's so difficult to judge and in any case I still didn't find any resource on the HMRC that precisely defines what I can do or not, from the technical perspective I mean.

Also, some of the tasks would be already performed by some employee, or it may happen later on, or simply I need to perform tasks that an employee would perform, that's mandatory to conclude a project usually, so shall I refuse to perform such tasks? Honestly, it's impossible to work in this way, every company would kick you out if you refuse to do something like 10% of an employee (and that's a difficult judgment from both parties), as you were hired to deliver the project or whatever, you're required to do some "work-around" anyway. Is this a problem with the HMRC?
I would expect the HMRC to have technical details on the matter if that's so hyper defined, not just that tool you gave me which is only to define your tax status, purely from the taxation point of view, and I wouldn't have doubts on where I stand there.

So as of now, I'm a bit confused by the technical requirements of my job from the HMRC...

DoctorStrange

Fedcas65 said:

monkey-fingers said:

Fedcas65 said:

monkey-fingers said:

Sorry, I missed one of the points you asked.

Yes, it takes a couple of weeks for the VAT number to come through. It's not an issue - you can issue invoices without VAT and then backdate them and send new ones once you have a VAT number.

Many outside IR35 contracts are setup like Business to Business (B2B). This means they're often paid monthly, and 30 days in arrears from invoicing. So if you started on the 1st January, you could well find that if you invoice on 31st January that you don't get paid until a few days into March!

I think you're thinking that these outside IR35 jobs are like getting a normal job, but with some risk and well-paid. It's not like that at all.

And talking about dividends.... the way most Ltds work is that you pay yourself a small untaxed wage (£12,500 or whatever your tax code is). The rest of the money your Ltd company takes is taxed at up to 25% in corporation tax. So even if you leave the money in the Ltd company and don't take any dividends, you'll still pay this.

Dividend tax is currently 8.5%, although it goes up to 10.5% in April. That's for the first £37,770. Then it's 33.75% above (shortly to be 35.75%)

Here: I'll give you some basic numbers which don't include any pension contributions.

£500 day rate for 220 days per annum.
Company income: £110,000

I'll assume £3000 in expenses
£12,500 in wages (as above)
£1,126 in employers NI

Company profit: £93,373
Corporation tax: £20,994

The company now has £72,379 to pay out.
You'll actually pay £14,959 in Dividend tax after that.

Giving you a total take home of £57,420 + £12,500 = £70k-ish.

The way you were looking at it on the other thread was thinking like PAYE and you've missed a pile of other things like employers NI and expenses.

You're about £5k a year better off doing it the above way ^

About the kind of job, is it a legal requirement or just what you believe it should be the line of work?
I mean, are you saying that if there is an employee doing a certain job, then the company can't hire a contractor outside IR35 for the same job?
What if he's assigned to that for a certain percentage of his time?

I've seen many contractors along the way, but I've never questioned how they worked there, despite they were doing almost all my tasks.
Though I've seen partners (companies hired by employer) doing something slightly different, and they had their own clients, so that's a bit different but I could have done it too if I had the same client list...
This conversation becomes a bit redundant when it comes to tasks and responsibilities...
I also don't think that you need to deliver what you contract on in IT, you're not delivering a project like the drawing of a house etc, there is an immense grocery list usually and I'm absolutely sure that it will never be in the contract, it's just impossible to put everything there, plus there will be many blockers along the way, which usually require a contract extension, the hire of other contractors or even employees, and probably more often than not, the entire project fails.

At some point I considered the saving in NI with a ltd company, that was very important for me, and I get access to the same "state pension" when it will be the time.

It's quite clear really.

An outside IR35 will be a set of deliverables. For instance, build a website that is capable of X Y and Z.
Often, these aren't necessarily time based. So you might get a daily rate plus project milestone bonuses.

You'll be working mostly alone, but possibly alongside a Project Manager.

It's not repeatable tasks, it's a one-off.

An inside IR35 is similar to an employee. They're often on extendable contracts that can go on for years (in some cases). For instance, I worked with a technical architect who was there for 9 years. That's extreme, but he was effectively doing a job that a company would expect to have an employee doing.

If the contractors you were working with previously were doing stuff alongside yourself as a permanent employee (and as you said, your job), they'd definitely be inside IR35. I wouldn't expect many developers, DBAs or even support staff to be outside.

Pick the wrong one, and HMRC will be after you.

Thanks for this message.

Repeatable tasks are everywhere though, it would be the case from at least more than one point of view, if the HMRC focus heavily on that, it can always identify me always inside IR35.
Obviously now that I know that, I'd try do not do such things, but it's so difficult to judge and in any case I still didn't find any resource on the HMRC that precisely defines what I can do or not, from the technical perspective I mean.

Also, some of the tasks would be already performed by some employee, or it may happen later on, or simply I need to perform tasks that an employee would perform, that's mandatory to conclude a project usually, so shall I refuse to perform such tasks? Honestly, it's impossible to work in this way, every company would kick you out if you refuse to do something like 10% of an employee (and that's a difficult judgment from both parties), as you were hired to deliver the project or whatever, you're required to do some "work-around" anyway. Is this a problem with the HMRC?
I would expect the HMRC to have technical details on the matter if that's so hyper defined, not just that tool you gave me which is only to define your tax status, purely from the taxation point of view, and I wouldn't have doubts on where I stand there.

So as of now, I'm a bit confused by the technical requirements of my job from the HMRC...

The reason you're struggling to reconcile things is that you want to be an employee but not have to pay employment taxes.

You seem to think that being Inside or Outside IR35 is something you're in control of, or that it can be impacted by your own working practices - those things are no longer true.

Practically every role you apply for will be Inside IR35 these days, so in reality there's nothing much for you to consider here.

If you do see any Outside IR35 roles and are lucky enough to get the gig, you'll either be under Ch 10 rules (in which case you've nothing to worry about) or Ch 8 rules (in which case you should consider professional advice).

Fedcas65

DoctorStrange said:

Fedcas65 said:

monkey-fingers said:

Fedcas65 said:

monkey-fingers said:

Sorry, I missed one of the points you asked.

Yes, it takes a couple of weeks for the VAT number to come through. It's not an issue - you can issue invoices without VAT and then backdate them and send new ones once you have a VAT number.

Many outside IR35 contracts are setup like Business to Business (B2B). This means they're often paid monthly, and 30 days in arrears from invoicing. So if you started on the 1st January, you could well find that if you invoice on 31st January that you don't get paid until a few days into March!

I think you're thinking that these outside IR35 jobs are like getting a normal job, but with some risk and well-paid. It's not like that at all.

And talking about dividends.... the way most Ltds work is that you pay yourself a small untaxed wage (£12,500 or whatever your tax code is). The rest of the money your Ltd company takes is taxed at up to 25% in corporation tax. So even if you leave the money in the Ltd company and don't take any dividends, you'll still pay this.

Dividend tax is currently 8.5%, although it goes up to 10.5% in April. That's for the first £37,770. Then it's 33.75% above (shortly to be 35.75%)

Here: I'll give you some basic numbers which don't include any pension contributions.

£500 day rate for 220 days per annum.
Company income: £110,000

I'll assume £3000 in expenses
£12,500 in wages (as above)
£1,126 in employers NI

Company profit: £93,373
Corporation tax: £20,994

The company now has £72,379 to pay out.
You'll actually pay £14,959 in Dividend tax after that.

Giving you a total take home of £57,420 + £12,500 = £70k-ish.

The way you were looking at it on the other thread was thinking like PAYE and you've missed a pile of other things like employers NI and expenses.

You're about £5k a year better off doing it the above way ^

About the kind of job, is it a legal requirement or just what you believe it should be the line of work?
I mean, are you saying that if there is an employee doing a certain job, then the company can't hire a contractor outside IR35 for the same job?
What if he's assigned to that for a certain percentage of his time?

I've seen many contractors along the way, but I've never questioned how they worked there, despite they were doing almost all my tasks.
Though I've seen partners (companies hired by employer) doing something slightly different, and they had their own clients, so that's a bit different but I could have done it too if I had the same client list...
This conversation becomes a bit redundant when it comes to tasks and responsibilities...
I also don't think that you need to deliver what you contract on in IT, you're not delivering a project like the drawing of a house etc, there is an immense grocery list usually and I'm absolutely sure that it will never be in the contract, it's just impossible to put everything there, plus there will be many blockers along the way, which usually require a contract extension, the hire of other contractors or even employees, and probably more often than not, the entire project fails.

At some point I considered the saving in NI with a ltd company, that was very important for me, and I get access to the same "state pension" when it will be the time.

It's quite clear really.

An outside IR35 will be a set of deliverables. For instance, build a website that is capable of X Y and Z.
Often, these aren't necessarily time based. So you might get a daily rate plus project milestone bonuses.

You'll be working mostly alone, but possibly alongside a Project Manager.

It's not repeatable tasks, it's a one-off.

An inside IR35 is similar to an employee. They're often on extendable contracts that can go on for years (in some cases). For instance, I worked with a technical architect who was there for 9 years. That's extreme, but he was effectively doing a job that a company would expect to have an employee doing.

If the contractors you were working with previously were doing stuff alongside yourself as a permanent employee (and as you said, your job), they'd definitely be inside IR35. I wouldn't expect many developers, DBAs or even support staff to be outside.

Pick the wrong one, and HMRC will be after you.

Thanks for this message.

Repeatable tasks are everywhere though, it would be the case from at least more than one point of view, if the HMRC focus heavily on that, it can always identify me always inside IR35.
Obviously now that I know that, I'd try do not do such things, but it's so difficult to judge and in any case I still didn't find any resource on the HMRC that precisely defines what I can do or not, from the technical perspective I mean.

Also, some of the tasks would be already performed by some employee, or it may happen later on, or simply I need to perform tasks that an employee would perform, that's mandatory to conclude a project usually, so shall I refuse to perform such tasks? Honestly, it's impossible to work in this way, every company would kick you out if you refuse to do something like 10% of an employee (and that's a difficult judgment from both parties), as you were hired to deliver the project or whatever, you're required to do some "work-around" anyway. Is this a problem with the HMRC?
I would expect the HMRC to have technical details on the matter if that's so hyper defined, not just that tool you gave me which is only to define your tax status, purely from the taxation point of view, and I wouldn't have doubts on where I stand there.

So as of now, I'm a bit confused by the technical requirements of my job from the HMRC...

The reason you're struggling to reconcile things is that you want to be an employee but not have to pay employment taxes.

You seem to think that being Inside or Outside IR35 is something you're in control of, or that it can be impacted by your own working practices - those things are no longer true.

Practically every role you apply for will be Inside IR35 these days, so in reality there's nothing much for you to consider here.

If you do see any Outside IR35 roles and are lucky enough to get the gig, you'll either be under Ch 10 rules (in which case you've nothing to worry about) or Ch 8 rules (in which case you should consider professional advice).

I'm not trying to avoid taxes, but a few people mentioned that there are more than tax rules, that is, also technical rules for the way you'll be taxed.
Honestly, if a company proposes a contract outside IR35, then I thought they would be responsible for such thing, not me, and btw, it's not my fault if the company will be giving me some tasks that could be handled by an employee, either because the current employees are already doing it, or because generally, employees could do it.
Anyway, if you refuse what they tell you to do and they give you the notice, simple... Regardless what it was contracted before...

For example, how would you judge these situations:

1. I'm a software developer with ton of experience, the company hires me to develop a new feature, or usually a new software.
The company already has developers but they're busy with the current project (very common).

A similar case could be for a Data Engineer, DB Developer, Infrastructure Developer, Cloud Engineer/Developer etc...

2. I'm a security engineer, the company needs a review of the current security posture, but the company obviously already has the the security team.
I saw this service done for 3 months by one contractor in one of the companies I've been employed, we already had our security team but they probably wanted a third party evaluation, pretty common in security, but in theory, the current security team should have been enough, it's just a third party opinion in addition to the current way of working.

3. I work as a project manager, but the other one is on paternity leave, so the company wants to hire someone for at least 6 months. For whatever reason, they propose a contract outside IR35.
How would any entity determine that it's outside or inside IR35?

What counts? The man in paternity leave? The kind of tasks? The fact that you don't find project managers everywhere?? (even though you should see the wonderful projects they create )

I heard this CH8/10 rule now for the first time, but I don't think it's up to me to determine that, would a business consultant know the answer to that? Shall I ask for a consultation before signing any contract?
Honestly, the story that I open the company in 24h and all is gonna be great has fallen very quickly , regardless how easy it is to find such contract, atm they're almost inexistent.