Contracting in the UK

Hi There,
I was working at home for 5 years as an Full Timer in IT before making my move over to London in January, I got hired immediately and settled for a full time position over here, earning approx > 65k a year. I thought at the time this was good money to be permanent and the job etc is easy going.
But after 6 months over here, I now realise, that taking a full time position may not have been the best option.

My reasoning
· I am young 26 years old. I have a mortgage in Ireland that is funded for next 18 months so i don’t have any worry about this.
· When I return back to Ireland, I have a position available for me.
·I don’t want to stay here too long as I’m pretty much a home bird.

I’m wondering is it time I hopped on the contracting bandwagon and started making as much as possible for my duration here, I am expecting hopefully a daily rate of 500 / 600 a day.

Also what’s the process for getting set up as contractor over here?

Any guidance would be great from anyone.

You will have to get legal and tax advice in the UK on this.

For what its worth, the UK Inland Revenue are noted for their strict treatment of independent contractors for tax purposes.

Have a look at http://www.prosperity4.com/index.aspx they have a lot of resources for contractors.

You can set up as a self employed contractor, and there is the possibility of using a Ltd company - however, this will depend on the type of contract work you are doing - UK Revenue have in place rules to prevent an "employee" using a Ltd company for tax purposes and calling themselves contractors for "longer term" contracts.

Also, they are now cracking down on the use of "service companies" in the UK

However, if you are a genuine contractor, doing short term contracts for different clients using a Ltd company would probably be OK.

Each individual is considered on his own basis, and on each individual contract for the above.

You should get professional advice.

PM me for more details

Working through an umbrella company is the best way to go in your situation
Any agency you would work through would be able to organise this for you

There are a few issues with contracting in the UK. The UK govt. have a rule called IR35.

It would all depend on your contract if you fall inside IR35 or not. If you do , you will pay tax on most of your pay. If you do not then you can set up a limited company, pay yourself the minimum wage (£10k approx) and take the rest in dividends which is taxed at a lower rate (about 20%). With a Ltd company and outside IR35 your take home pay will be about 80% of gross.

With Ltd company and inside IR35, will vary so can't really say but would probably just be normal tax.

Also, you can use the services of an online account, I use SJDAccountancy (cost me £80 per month, but that includes your end of year account, payroll etc.)

Due to recent tax changes in the UK, the limited Company is probably the best option.

Another option is the Umbrella company. There are various suppliers out there. They basically act as your employer and you can claim back a lot of expenses. Beware though as the govt. will ask for receipts if they perform an audit on you. The Umbrella organization will raise invoices for you and also do your paye etc and then give you a wage.

Using the Umbrella company you can take home between 80 - 85% of gross but is risky if you try to claim expenses that you do not actually incurr.


You can get good advice on contracting in the uk on http://www.contractoruk.com/

The forums are good for Q&A

http://forums.contractoruk.com/


You can create a company online or have the online accountants do this for you.

Good luck!!