New to the game

[festiefofs]

Hi guys,
I'm a newbie so please show some patience if this has been raised before. I have had a look but couldn't work out where would be best to look as I don't know what I'm looking for, hence the question.
I'm looking at going into contractor work, having just finished in the Army, and I'm wondering what 'Limited Company Rates' means, and who should I speak too for this sort of advice? i.e. bank? accountant? someone else?
Many thanks for taking the time to read this post.
Cheers
FF

[cojak]

What type of work do you hope to do as a contractor FF?

[BolshieBastard]

Hi guys,
I'm a newbie so please show some patience if this has been raised before. I have had a look but couldn't work out where would be best to look as I don't know what I'm looking for, hence the question.
I'm looking at going into contractor work, having just finished in the Army, and I'm wondering what 'Limited Company Rates' means, and who should I speak too for this sort of advice? i.e. bank? accountant? someone else?
Many thanks for taking the time to read this post.
Cheers
FF

'Limited co rates' is agent speak to supposedly show you'll be better off doing the role as an ltd co contractor.

The reality is, it is a pretty tulipe rate anyway.

Some accountants do a free 30 or 60 min consultation. Try and find one locally who specialises in IT contracting and ask for a consultation. They should be able to explain the ins and outs of running a company, IR35 stuff and their services \ costs.

You'll need to set up an ltd co before you can set up a company bank account. Try and do a search of banks as some may give upto 18 months free business banking (its expensive otherwise)!

Good luck and thanks for your service to our country.

[LisaContractorUmbrella]

Welcome to the forum

'Limited Company rate' is usually used to differentiate between the rate that you would get working on the agency's books and the rate you would get working through your own limited company or an umbrella company. With the former, the agency takes on the employer responsibilities and has to pay Employer's National Insurance contributions to HMR&C on top of what they pay you. If you work through your own company, you take on the responsibility of paying the correct taxes (PAYE if you're inside IR35) and have none of the protection and benefits of being a permanent employee. If you work with an umbrella they become the employer; either way the agency saves money and therefore the rate that is paid in these circumstances should be higher than the equivalent position paid direct.

HTH

[Wanderer]

I'm wondering what 'Limited Company Rates' means, and who should I speak too for this sort of advice?

You can speak to us, though I can't guarantee that you will always get good advice!

There is a good First Timers Guide and other links on the right which answer a lot of questions.

The specific one you have is with regards to getting paid.

You can work for a client as an employee of the agency and the agency will pay you net of PAYE/NI just like in a normal permie job so there is no further tax to pay, nor will you have to deal with HMRC. Another possibility is that you could work through an umbrella company which is close to the same thing except that you work for the umbrella who contracts to the agency who contracts to the client. In this case the money you take home is all yours - no further tax to pay.

The other option is to form a Limited Company which contracts with the agency, who contracts with the client. As director of the LTD company you can decide when and how to pay yourself, potentially paying less tax. The downside is that there is a lot of responsibility and admin involved in this method which might not be what you want until you are sure you are going to be contracting long term.

Limited or umbrella? Making the right choice

The tax you would pay with each trading structure is shown by this calculator. Beware of the calculators on the umbrella sites - some of them show dodgy (inflated net pay) figures.

Also beware of the Noobie Contractor Mistakes.

If you aren't sure you will be contracting long term, on a low-ish annual rate (<£30k) or you just want a quiet life then I recommend PAYE or an Umbrella. LTD company is tax efficient but there are a lot of responsibilities and a fairly steep learning curve.

Good luck!

[kaiser78]

Hello and welcome - there is also a Welcome/FAQs section at the top which contains useful intro info.