Contracting

pocquet · 2 October 2017 at 3:49PM

Hello All,

I am in the position to accept a role contracting as a Data Analyst for a large water company.

The pay is Day Rates and not PAYE so I will have to submit my tax and national insurance myself.

I have never worked as a contractor before, I have as a temp contract but paid as a PAYE.

The company employing me asked if I had my own Limited company or an umbrella company.

Im not 100% sure what that means and advised I will get back to them.

I have found allot of info online but would like a solid guide.

Do I simply save a portion of my earnings and pay via self assessment or is there something else going on here?

Undervalued · 2 October 2017 at 4:02PM

pocquet wrote: »

Hello All,

I am in the position to accept a role contracting as a Data Analyst for a large water company.

The pay is Day Rates and not PAYE so I will have to submit my tax and national insurance myself.

I have never worked as a contractor before, I have as a temp contract but paid as a PAYE.

The company employing me asked if I had my own Limited company or an umbrella company.

Im not 100% sure what that means and advised I will get back to them.

I have found allot of info online but would like a solid guide.

Do I simply save a portion of my earnings and pay via self assessment or is there something else going on here?

That is to cover themselves in case you failed to properly declare your earnings for tax and national insurance.

The alternative is for them to deduct tax and NI on everything they pay you leaving you to claim any excess back from HMRC.

Some will accept alternative assurances such as a letter from an accountant saying that he deals with your tax affairs or, if your turnover is high enough as a sel employed person, a VAT registration.

Comms69 · 2 October 2017 at 4:14PM

It doesn't sound like true self employment to be honest, but it depends on a number of factors.

Typically putting away 25-30% + keeping a record of expenses would be a good start.

indianabones · 2 October 2017 at 6:26PM

One of the better sites for information regarding contracting is SJD accountancy. I have never used them because I haven't contracted. But whenever I've thought about it and considered that I might go for it, I've gone to their website and/or called them for info.

Basically it's simple.

Limited = Your own company, you create business account do all the paperwork (not as difficult or time consuming as they scare you into thinking). You then get paid all of your money barring tax.

Umbrella = A company that you are practically an employee of. They do the paperwork and take a % of your pay.

Unless you're making a sh*tload of money, limited is the way.

agrinnall · 2 October 2017 at 7:12PM

indianabones wrote: »

[STRIKE]Unless[/STRIKE] Particularly if you're making a sh*tload of money, limited is the way.

Corrected that for you.

directdebiter · 3 October 2017 at 5:12PM

indianabones wrote: »

One of the better sites for information regarding contracting is SJD accountancy. I have never used them because I haven't contracted. But whenever I've thought about it and considered that I might go for it, I've gone to their website and/or called them for info.

Basically it's simple.

Limited = Your own company, you create business account do all the paperwork (not as difficult or time consuming as they scare you into thinking). You then get paid all of your money barring tax.

Umbrella = A company that you are practically an employee of. They do the paperwork and take a % of your pay.

Unless you're making a sh*tload of money, limited is the way.

The above isnt quite correct. With umbrella you are an employee of the Umbrella Company. Limited Company is best if you are lively to earn over approx £30-£35k. With a Limited Company you dont do all the paperwork unless you are great at accounting and best to employer a contractor accountant. A lImited Company means greater take home pay. The OP sounds like a standard contractor and Limited V Umbrella depends on the earnings.

I would check this out for further detail: http://www.contractoruk.com/first_timers/choosing_limited_or_umbrella.html

HTH

motorguy · 3 October 2017 at 7:45PM

If you plan on staying at contracting i cant think of any reason why you wouldnt go down the Limited Company route.

Loads of info here

http://forums.contractoruk.com/

Find a good accountant too. Theres usually enough around your local town.

motorguy · 3 October 2017 at 7:48PM

Undervalued wrote: »

That is to cover themselves in case you failed to properly declare your earnings for tax and national insurance.

The alternative is for them to deduct tax and NI on everything they pay you leaving you to claim any excess back from HMRC.

Some will accept alternative assurances such as a letter from an accountant saying that he deals with your tax affairs or, if your turnover is high enough as a sel employed person, a VAT registration.

I dont believe any company who want to employ an IT contractor will want to put an employee on their books, as that will make them liable for Employers NI (14% from memory) as well as holiday pay, and give you rights as an employee.

Likewise there is most likely an agency in between who wont want the O/P going direct.

Also it will rattle your permanent staff if you suddenly employ someone at a much higher rate.

They will almost certainly only deal with the O/P via a LTD Co or Umbrella.

Potbellypig · 3 October 2017 at 7:58PM

pocquet wrote: »

Hello All,

I am in the position to accept a role contracting as a Data Analyst for a large water company.

The pay is Day Rates and not PAYE so I will have to submit my tax and national insurance myself.

I have never worked as a contractor before, I have as a temp contract but paid as a PAYE.

The company employing me asked if I had my own Limited company or an umbrella company.

Im not 100% sure what that means and advised I will get back to them.

I have found allot of info online but would like a solid guide.

Do I simply save a portion of my earnings and pay via self assessment or is there something else going on here?

I'm a contractor who was in the same position as you a few years ago. The first year I went with an Umbrella, and whilst it is very convenient (effectively the same as PAYE, for all intents and purposes), it also costs a lot more than the next option.

I set up a Ltd company a year and half ago and haven't looked back. It's took a bit of getting used to but the accountant helped out a lot. You need to be a lot better with money as you'll be handling your whole invoice every month. I put 25% away every month for tax but paid a fair few % less. It has big benefits when it comes to how much more money you see every month (especially with a good accountant) but it's not hassle free. You can also put various different expenses through a Ltd company, which also helps.

motorguy · 5 October 2017 at 10:44AM

Potbellypig wrote: »

I'm a contractor who was in the same position as you a few years ago. The first year I went with an Umbrella, and whilst it is very convenient (effectively the same as PAYE, for all intents and purposes), it also costs a lot more than the next option.

I set up a Ltd company a year and half ago and haven't looked back. It's took a bit of getting used to but the accountant helped out a lot. You need to be a lot better with money as you'll be handling your whole invoice every month. I put 25% away every month for tax but paid a fair few % less. It has big benefits when it comes to how much more money you see every month (especially with a good accountant) but it's not hassle free. You can also put various different expenses through a Ltd company, which also helps.

+1

I generally pay around 10% tax through my limited co (although i have high travel expenses of around £20,000 a year including subsistence allowances to offset against my day rate fees).

Much more palatable than this PAYE nonsense.

Contracting

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