Newbie Contractor Questions

[EngDesigner]

Hi all,

I'll give you a bit of background, then I'll ask the questions.

I've been working as a Mechanical Design Engineer for about 10 years doing PAYE contracts through a few design agencies. I'm in my early thirties, and I've decided it's about time that I worked for myself. I'm in the process of forming my limited company and going on the Flat Rate Scheme.

I've had a look through a lot of the posts on this forum, and they've been really helpful, but I need to clarify a few things, some of the questions will seem really dumb to most, but please have patience.

I've been offered a 6 month contract at £30ph (ltd), through an agency.
Here's the questions:

1. Do I include VAT on the invoices? (so the total I would charge would be ~£36ph)

2. If the job advertisement has offered at £30ph, is it possible to get the company to increase the rate?

3. What can I claim for on the Flat Rate Tax Scheme? (Lodgings, Fuel..?)

4. At the end of the year if I've paid myself a very small salary (£1000), and the rest in of the earnings from the contract in dividends, would I be liable for corporations tax?, dividends tax? any other tax?

5. What is the going rate for a Design Engineer, I'm I selling myself short? (I know I not in the league of the IT guys)

I've been contact by quite a few agencies, and I've done a search on here to see if they are any reviews, and there's a few bad ones for one of them. The agency is called Huxley, and they are ringing me a lot, a real lot. Are they worth going with or should I blacklist them?
The other is matchtech, are they any good?
Modis International seems to get good reviews, but I haven't sign up with them yet, will be doing this today.

That's all the questions for now, I hope I haven't sounded to naive, I'm just learning all this stuff.

Regards

Eng

[SimonMac]

Hi all,

I'll give you a bit of background, then I'll ask the questions.

I've been working as a Mechanical Design Engineer for about 10 years doing PAYE contracts through a few design agencies. I'm in my early thirties, and I've decided it's about time that I worked for myself. I'm in the process of forming my limited company and going on the Flat Rate Scheme.

I've had a look through a lot of the posts on this forum, and they've been really helpful, but I need to clarify a few things, some of the questions will seem really dumb to most, but please have patience.

I've been offered a 6 month contract at £30ph (ltd), through an agency.
Here's the questions:

1. Do I include VAT on the invoices? (so the total I would charge would be ~£36ph)

2. If the job advertisement has offered at £30ph, is it possible to get the company to increase the rate?

3. What can I claim for on the Flat Rate Tax Scheme? (Lodgings, Fuel..?)

4. At the end of the year if I've paid myself a very small salary (£1000), and the rest in of the earnings from the contract in dividends, would I be liable for corporations tax?, dividends tax? any other tax?

5. What is the going rate for a Design Engineer, I'm I selling myself short? (I know I not in the league of the IT guys)

I've been contact by quite a few agencies, and I've done a search on here to see if they are any reviews, and there's a few bad ones for one of them. The agency is called Huxley, and they are ringing me a lot, a real lot. Are they worth going with or should I blacklist them?
The other is matchtech, are they any good?
Modis International seems to get good reviews, but I haven't sign up with them yet, will be doing this today.

That's all the questions for now, I hope I haven't sounded to naive, I'm just learning all this stuff.

Regards

Eng

It would have been quicker to use the search function and all your questions would have been answered without having to type such a long post, but here goes

1) Yes
2) You can try
3) If you mean Flat Rate for VAT nothing
4) Yes
5) Dunno


BTW Hello

[cojak]

(The OP has already said Hello the welcome forum... )

[northernladuk]

1. Do I include VAT on the invoices? (so the total I would charge would be ~£36ph)

Yes

2. If the job advertisement has offered at £30ph, is it possible to get the company to increase the rate?

Is it possible? Yes. Will you manage it? Sometimes. You have to try though. It is a negotiation phase so they offer you a number, you try up it, they will say no, you have to asses the possibility of them folding if you play hardball or losing the gig. If you are new to a tight market it might be worth accepting after the first phase to get something under your belt.

3. What can I claim for on the Flat Rate Tax Scheme? (Lodgings, Fuel..?)

Read up on the flat rate scheme. There are links here and lots on the web. It will answer other questions that will no doubt pop up if you don't fully understand it. In a nutshell it is a flat rate so you don't have to worry about individual items unless they are over £2k. More to it than that so best thing to do is read up on it.

4. At the end of the year if I've paid myself a very small salary (£1000), and the rest in of the earnings from the contract in dividends, would I be liable for corporations tax?, dividends tax? any other tax?

Very basic question that should be covered in the first timer links and bit of research in great detail. Again if you understand it first it will stop you asking endless questions later.

5. What is the going rate for a Design Engineer, I'm I selling myself short? (I know I not in the league of the IT guys)

Everyone on here is primarily IT so you won't get an answer you can trust. Do your own research on the job forums and see what people are offering. Keep an eye out over the next few months and spot the trends.

I've been contact by quite a few agencies, and I've done a search on here to see if they are any reviews, and there's a few bad ones for one of them. The agency is called Huxley, and they are ringing me a lot, a real lot. Are they worth going with or should I blacklist them?
The other is matchtech, are they any good?
Modis International seems to get good reviews, but I haven't sign up with them yet, will be doing this today.

Personally I take all the agency review with a pinch of salt. Even the best agencies can mess up and get a bad press from the odd contractor they pissed off. I can't afford to blacklist agencies and turn down work so will give all of them a fair shot but use caution with names that crop up from time to time. If an agency has quite a bit of bad press over payment I will make sure I negotiate the best payment possible for example but wouldn't turn down work from them just because someone else has a beef. I can't afford the bench time just on hearsay.

That's all the questions for now, I hope I haven't sounded to naive, I'm just learning all this stuff.

Good stuff and nice to hear, just be aware this is mainly IT and there are lot of links covering all the basics on the site. Also many newbie questions crop up daily and have already been answered so the Search button can get you quick answers.

[SimonMac]

Personally I take all the agency review with a pinch of salt. Even the best agencies can mess up and get a bad press from the odd contractor they pissed off. I can't afford to blacklist agencies and turn down work so will give all of them a fair shot but use caution with names that crop up from time to time. If an agency has quite a bit of bad press over payment I will make sure I negotiate the best payment possible for example but wouldn't turn down work from them just because someone else has a beef. I can't afford the bench time just on hearsay.

WHS

People very rarely tell you about when an agent goes the extra mile, the people I am working through has only one mention on here and its negative, but for me have been fantastic.

Go with your eyes open, and you should be fine, then come here and bitch about them if they screw you over!

[EngDesigner]

Hello SimonMac Thanks for you reply. I've done a search, but just needed confirmation.


Hello cojak

Hi northernladuk, Thanks for your reply. I still reading up on this stuff, been going through the links on the right hand side of the webpage. I know they are basic questions, but asking basic questions (and also reading up on it) is just more reassurance for myself.

[Scrag Meister]

1) Yes, negotiated rates with limited co is Net of VAT.
2) Certainly possible, but frowned upon mid contract.
3) VAT is reclaimable on single invoices above 2k
4) Absolutely, probably depends on your rate though, but £30 ph I would think there will be something unless you sink any spare into a pension.
5) No idea sorry, am in IT.

M0dis have my vote if they get something to offer you, was with them 3 years and I think I had 2 payment failures due to Bank holiday scheduling or similar. Weekly payment 4 days in arrears.

Ikas International also has my vote. Monthly payment 4 days in arrears.

Thomson Keene, always friendly and got some interviews from them a few years back, never worked through them though.

Currently direct so have no more to mention.

GL in your search.

[eggtastico]

Hi all,


1. Do I include VAT on the invoices? (so the total I would charge would be ~£36ph)

2. If the job advertisement has offered at £30ph, is it possible to get the company to increase the rate?

3. What can I claim for on the Flat Rate Tax Scheme? (Lodgings, Fuel..?)

4. At the end of the year if I've paid myself a very small salary (£1000), and the rest in of the earnings from the contract in dividends, would I be liable for corporations tax?, dividends tax? any other tax?

5. What is the going rate for a Design Engineer, I'm I selling myself short? (I know I not in the league of the IT guys)


Regards

Eng

1) You will charge VAT on your invoice - usually the VAT is calculated after the sub total to give a final total (this makes it easier for looking at VAT & saves you working it out again at a later date - so charge £30 per hour & put VAT at the end. You cannot charge VAT until you get a VAT number, even if you are waiting for one.. - I keep my VAT income seperate from my business income, just so I have it available when the green form needs to be filed & paid.

2) Its always worth asking... usually better to ask after the initial contract & re-negotiating an extension.

3) You can claim what ever expenses you want that are valid - however, it will not affect your VAT return, as you forfeit that VAT element by going flat rate.
If you put in £50 of fuel, you can still claim £50 for fuel as an expense - you just cant offset the expense VAT against your income VAT.

4) yes, there will be taxes involved... Still, should work out cheaper than paying 40% or whatever + NI.

5) no idea.

You should have a chat with an accountant if your not sure/clear on things. A good accountant will save you more than his cost. If your not... then get a new accountant 'o)