T&C expenses changes & impact on public sector contacting T&C expenses changes & impact on public sector contacting
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  1. #1

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    Default T&C expenses changes & impact on public sector contacting

    This is my 1st post but have been a long time reader of this forum.

    I’m currently contracting in the public sector IT (2th Gig + with a few extensions on each ) did contracting for time back in late 90’s (millennium bug paid for my 1st Mercedes at 21 them where the days )

    Now all this Umbrella T&C expenses changes

    Why do I use a Umbrella Er To Stay Clean and Dry

    My rate is just about on the bracket that would be recommended to go limited as such did the maths and there was not much of benefit as my ir35 status is risky. So went with a CUK recommended Umbrella company. (When I say CUK recommended it was awarded CUK Best Umbrella Company of the year at the time )

    So far it good been working under a Umbrella claiming legitimate T&C expenses has seen take home rate of around 70% tax affairs are all in order with no need for self assessment forms.

    Clients have been good even the “much loved” agents have given me not many problems bar a few late payments on bank holidays.

    Overall I feel that contracting as made be a better worker the risk of it all wanting that extension or to be in the running to be on next BIG project all makes you work harder you deliver where “some” public sector permanent workers do not. With the new T&C expenses changes all that is to end. Some may end up taking home less than the permanent workers gets without all the benefits.

    I can understand the governments need to address contracting rules can’t say I do not feel for the self employed shelf stackers as I call them you know the dot com companies I am on about that make it’s “staff” use Umbrellas to claim expenses just to get a minimum wage. Government can’t even make them pay tax let alone pay it’s staff in descent way.

    HMRC has not factored in how much it relies on IT contractors in the public sector I’m sure that many on this site have been at least been offered a gig in various government services in their time.
    Rates may not be the best but are not too bad it’s better then bench time I’m my view.


    SO what next

    GO limited and all that goes with it IR35, VAT ,Accounts and Self assessment for 30k a year ?

    Stay with Umbrellas and take the hit with T&C expenses ?

    Give up contracting and go permanent ?

  2. #2

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    Quote Originally Posted by sharky View Post
    GO limited and all that goes with it IR35, VAT ,Accounts and Self assessment for 30k a year ?

    Stay with Umbrellas and take the hit with T&C expenses ?

    Give up contracting and go permanent ?
    Probably not Ltd at that level of income.

    If you can get a perm role that will let you develop new skills or improve the ones you have, then you could maybe come back to contracting in a few years at a rate that would make it worth it.

    But can you handle perm after years? It's a lifestyle question, not just a money one. If not, maybe you just need to suck it up and stay umbrella, and look for as many roles close to home as you can.

    Or stay umbrella for the next year or two but also, in your spare time, do something to ratchet up your skills.

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    Change T&C to T&S for starters.

    Very much a personal decision. For me, I can change my accommodation level and make the same margin or more than I do now. Would you really want to go back to permiedom for the sake of not being able to claim back £x expenses each day?
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    The rule of thumb is around 30k and lower the Umbrella was the better way to go but that's going to change now. It will be interesting to see if someone can come up with a new figure for next year. I'd guess it would be highly dependant on how much expenses would be incurred.

    If you are contracting on 30k a year I would take option C and go get some skills you can get paid better for.
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  5. #5

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    Quote Originally Posted by sharky View Post
    Give up contracting and go permanent ?
    Probably this TBH, unless you can attract a better rate in the private sector on a contract that is outside IR35. It isn't all about the money, but having a company is a significant amount of hassle to be weighed against an income that is probably no better than what you'd get as a permie, after factoring employment benefits. This may be a good opportunity to think about the long-term and the skills that you'll need to get you there. That way, you can have your employer pay for that training and come back to contracting in future with a good idea about what it entails. Very personal decision, of course.

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    Quote Originally Posted by northernladuk View Post
    The rule of thumb is around 30k and lower the Umbrella was the better way to go but that's going to change now. It will be interesting to see if someone can come up with a new figure for next year. I'd guess it would be highly dependant on how much expenses would be incurred.

    If you are contracting on 30k a year I would take option C and go get some skills you can get paid better for.
    Excuse my ignorance here; this £30k rule of thumb, is that gross contract income (invoice total for year) or net income in to your personal bank?

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    Quote Originally Posted by gables View Post
    Excuse my ignorance here; this £30k rule of thumb, is that gross contract income (invoice total for year) or net income in to your personal bank?
    Gross invoice.
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    Quote Originally Posted by SueEllen View Post
    Gross invoice.
    Ta

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    Ive already made my decision (presently under umbrella as it suited this gig been here 8 months) as required by my contract terms I am giving my client co 2 weeks notice on Friday 25/3.

    I have my Umbrella chasing me to go Ltd, but I have told them I will let them know my decision when I have made it (eventually) I just cant take the hit on the T&S at my present location, I am commuting 116 miles a day, and getting up at 04.30 to do it, 9 hrs on site, and an average of 3 hrs a day of travelling. I sit with a bunch of contractors who live locally (and some have been here years) all Ltd, and quite clearly working within Ir35 but kidding themselves they are out of it.

    I have applied for a permie role local to me (walking distance) its bobbins money but the locality and lack of the commute must be worth 10k a year. (Yes I know its not money in the bank though)

    I have always considered myself a contractor been doing it 16 years this year but the times they are a changing, and rates certainly aint getting any higher. I suspect I will find it hard as a permi, and even now if a local gig comes up I`ll take it, and may use an umbrella dependant on circumstances.

    For me the chancellor as sent me a "wake up call", and as long as that wake up call is not longer going to be at 04.30hrs I`m happy.

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    If it suits you then it's a good choice. I suspect a lot more of the experienced heads that are keeping abreast with the changes might be going a similar way before April 17.
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