Contracting Newbie - Guidance needed!

[majid0403]

Hi All,

I have just been offered a 3 months contract, which would probably get extended for another 2 months or so. After that I want to take up a permanent position in the same company as I know there is a vacancy available. I havent accepted the offer yet, is this a good opportunity to make some money and still have job security with the permanent role?

1) Should I still start my own LTD Company or go with an umbrella company?
2) On £350 a day what sort of take home salary I can expect?
3) Say my contract doesnt get extended after 3 months, what tax implications will be there for my permie job after the 3 months?
4) Will this be very complicated to move from contracting to permanent in terms of tax etc?
5) what are things I need like insurance etc.

Any help will be greatly appreciated.

Thanks
Majid

[cojak]

Since you don't expect to be in contracting for long, just use an umbrella and have done with it.

There'll be no tax issues when you go back to permiedom either.

[majid0403]

Since you don't expect to be in contracting for long, just use an umbrella and have done with it.

There'll be no tax issues when you go back to permiedom either.

Thank you very much for the reply.

But I have been told that if I use umbrella, I will have to pay very high tax and if I use my own company I can save quite a bit? Is that not true?

I am just thinking that, what if my contract gets extended for another 3 months? Am I not better off going with my own company?

[cojak]

You said you didn't want tax problems and that you're going back to permie (and high tax) anyway.

Use an umbrella and you won't have any tax problems.

[TOSH1]

Hi


I agree with cojak

Use an umbrella, its not worth opening a LTD company for 3 months or even 6 months. You will be paying higher tax rate but there is no hassle of opening and closing a company and all the other paperwork

[manubbo]

About take home, with umbrella it's roughly the same as you were a permanent employer with a monthly gross of the contract monthly value (i.e. for £350p/d, it would be around £7350 gross a month, if you work 21 days in a month). You can use any online PAYE calculator.

Things a bit different are that Umbrella will charge you a monthly fee (I think that's deducted from the net, but I'm not sure) and you can claim some expenses - again I'm not sure how it works as I talk from what I read. But roughly that would be your take home pay.

[malvolio]

About take home, with umbrella it's roughly the same as you were a permanent employer with a monthly gross of the contract monthly value (i.e. for £350p/d, it would be around £7350 gross a month, if you work 21 days in a month). You can use any online PAYE calculator.

Things a bit different are that Umbrella will charge you a monthly fee (I think that's deducted from the net, but I'm not sure) and you can claim some expenses - again I'm not sure how it works as I talk from what I read. But roughly that would be your take home pay.

There won't be any allowable expenses for a single engagement remember...

[LisaContractorUmbrella]

Thank you very much for the reply.

But I have been told that if I use umbrella, I will have to pay very high tax and if I use my own company I can save quite a bit? Is that not true?

I am just thinking that, what if my contract gets extended for another 3 months? Am I not better off going with my own company?

You would only be better of through a Ltd Co if your working practices put you outside of IR35 so that's something you will need to check out before opening a Ltd Co and, as Cojak has pointed out, setting up a company for 3-6 months work is really not worth it.

[TheFaQQer]

1) Should I still start my own LTD Company or go with an umbrella company?

For a short-term, one-off gig like this, umbrella.

2) On £350 a day what sort of take home salary I can expect?

Work out how much your salary will be. Work out how much NI you need to pay. Then work out how much tax you'll pay. Then you know what your take home will be.

3) Say my contract doesnt get extended after 3 months, what tax implications will be there for my permie job after the 3 months?

None. I'd be interested to know why a company would extend your contract and then take you on permie after a short time, though. I know people who have gone from contract to permie after a couple of years there, but if they want to take a permie on, why would they pay you as a contractor first?

4) Will this be very complicated to move from contracting to permanent in terms of tax etc?

Not if you go umbrella. It's no more complicated than going from any other employer to a new one.

5) what are things I need like insurance etc.

What does the contract say? What does your employer say?

[b0redom]

There won't be any allowable expenses for a single engagement remember...

Really? What about a laptop/phone etc? Even though travel wouldn't be allowable, surely there are some expenses incurred which will be claimable?