Im a network engineer and have never done contract work before. I was made redundant by my employer 2 months ago after 5 years of full service. They now want to recruit me as a contractor for 6 months @ 200GBP/Day. I have looked around and asked what should be my way to go about the finance. So i was told to avoid umbrella since im staying more than 3 months and my salary will be above 25k, so its more tax efficient to setup a LTD Company. I've been looking into it and had my mind set, but my old manager has advised its not required as he recommended to stay as a Self-Employed contractor. I would like to get your advice as it seems there's less hassle with being self employed, but i don't mind looking for an accountant and doing invoices for a few minutes a week, if i am able to get a higher take-home with the LTD company option. Any advice will be much appreciated.
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Contract Advice - Self Employed or Limited Company?
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A slight reality check here. At £200 a day to you your ex-employer is doing you no favours: in fact he;s rather taking the p!ss. What's he's done is keep his costs the same while removing all your employment rights and saving himself 13.8% Employers NICs which you are now going to pay for him, as well as not having to pay you for holidays, sick pay, pensions and training and being able to dump you on no notice at all. Also, if he's taking you back in the same role, you can't possibly be redundant and any redundancy pay you did get is liable to tax at the higher rate.
So perhaps this isn't the best idea in the world and you may be better off selling your skills on the open market.
But to answer your question, if you feel you have to take the offer, the job will be IR35 caught, so go umbrella; you won't get much more via a limited and you don't need the hassle. Meanwhile get reading the guides and work out what to do next.Blog? What blog...? -
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Originally posted by LisaContractorUmbrella View PostIf the OP is going direct with his old employer there isn't any reason why he couldn't go sole trader route is there?Comment
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Originally posted by deeniguy View PostIm a network engineer and have never done contract work before. I was made redundant by my employer 2 months ago after 5 years of full service. They now want to recruit me as a contractor for 6 months @ 200GBP/Day. I have looked around and asked what should be my way to go about the finance. So i was told to avoid umbrella since im staying more than 3 months and my salary will be above 25k, so its more tax efficient to setup a LTD Company. I've been looking into it and had my mind set, but my old manager has advised its not required as he recommended to stay as a Self-Employed contractor. I would like to get your advice as it seems there's less hassle with being self employed, but i don't mind looking for an accountant and doing invoices for a few minutes a week, if i am able to get a higher take-home with the LTD company option. Any advice will be much appreciated.
If you get another contract in the future that is outside IR35, operating via a limited company will be much more worth your while financially.Comment
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Originally posted by FarmerPalmer View Post... And if self-employed and deemed to be an employee by HMRC then it's the employer who gets hit more so than than the deemed employee.Comment
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Originally posted by deeniguy View PostThey now want to recruit me as a contractor for 6 months @ 200GBP/DayFree advice and opinions - refunds are available if you are not 100% satisfied.Comment
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Originally posted by Wanderer View PostWhat was your permie salary? Unless it was ~£25k/year they are underpaying you for the contract role.
and I really wouldn't go back to a previous employer but that may be just me.merely at clientco for the entertainmentComment
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Originally posted by FarmerPalmer View Post... And if self-employed and deemed to be an employee by HMRC then it's the employer who gets hit more so than than the deemed employee.
Boo2Comment
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Originally posted by eek View PostWWS the basic rule for contracting salary/ 1000 = hourly rate.
Originally posted by eek View Postand I really wouldn't go back to a previous employer but that may be just me.
Boo2Comment
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