Short term contract - LTD or Umbrella?

[88zero]

Hi

I've recently gone back into the world of IT contracting after being in a perm role for a couple of years. I've secured an initial 4 month contract so I'm going to see how it goes, I may at the end decide to back to perm. My question: is it worthwhile setting up a LTD company for a short term contract? I've read various articles that suggest its suitable if contracting is a long term option for you. I've used umbrella companies in the past but got a big hacked off with paying their fees hence why I'm looking at the LTD route. What I want to avoid is finding myself liable for more tax if at the end of the 4 months I decide to go back to perm .

Cheers!

[mudskipper]

Hi

I've recently gone back into the world of IT contracting after being in a perm role for a couple of years. I've secured an initial 4 month contract so I'm going to see how it goes, I may at the end decide to back to perm. My question: is it worthwhile setting up a LTD company for a short term contract? I've read various articles that suggest its suitable if contracting is a long term option for you. I've used umbrella companies in the past but got a big hacked off with paying their fees hence why I'm looking at the LTD route. What I want to avoid is finding myself liable for more tax if at the end of the 4 months I decide to go back to perm .

Cheers!

For four months, and if you're not sure you're going to stick it, then umbrella sounds like the best option. Be aware you can't claim expenses if you only have one gig through an umbrella though...

[LisaContractorUmbrella]

The costs and hassle of setting up a Ltd Co just for 4 months to then close it down again really doesn't seem worth it. Saying that if you are on a really good daily rate and would definitely be outside IR35 then you could have a fairly significant financial advantage.

As Mudskipper says - if it is your intention to only work on one assignment and then return to permieland, you wouldn't be able to claim travel and subsistence expenses as you would be deemed to be travelling to a permanent workplace rather than a temporary one.

[original PM]

In the eyes of the law though if the stated intention is to do more than 1 gig via the brolly can you still claim expenses?

What if there is a second gig lined up which falls through at the last minute - where do you stand?

[LisaContractorUmbrella]

It all comes down to intention so, if you sign up with a brolly for a 3 month contract that you've fitted in before taking a permanent job then you wouldn't be able to claim as your intention is, quite clearly, to leave the brolly's employment after 3 months.

In your example, where you have another gig lined up but it falls through, you'd have to stop claiming at the point you knew you'd only have one assignment with the brolly but claims before then would be valid as it was your intention, when you started your employment with them, to work on more than one assignment.

[Paddy]

Hi

I've recently gone back into the world of IT contracting after being in a perm role for a couple of years. I've secured an initial 4 month contract so I'm going to see how it goes, I may at the end decide to back to perm. My question: is it worthwhile setting up a LTD company for a short term contract? I've read various articles that suggest its suitable if contracting is a long term option for you. I've used umbrella companies in the past but got a big hacked off with paying their fees hence why I'm looking at the LTD route. What I want to avoid is finding myself liable for more tax if at the end of the 4 months I decide to go back to perm .

Cheers!

If you have any friends who are contractors you can use their limited company for a short term contact.

[northernladuk]

If you have any friends who are contractors you can use their limited company for a short term contact.

Sorry but I think this is an awful idea. Keep your friends and work separate.