Finally taking the plunge and moving into contracting - Just a hello Finally taking the plunge and moving into contracting - Just a hello
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  1. #1

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    Smile Finally taking the plunge and moving into contracting - Just a hello

    Following just over 3 years of being on HRs naughty list and suffering pure/concentrated existential dread brought on by permiedom (my new favourite word), I finally have enough savings to confidently take on the risks of potentially being out of work for a while. It has felt great handing my notice in and setting up my LTD—a sense of freedom I've not really felt during my career thus far. Permie life felt like I had never left highschool on one too many occasions, or like I was an initiate in some whacky cult on others.

    I had given my employer a chance to keep me (with outrageous demands). The response was, "at that salary you'd be within the top X% of devs within the company, and would be leapfrogging others". 2 weeks later and I've now lined up a gig which will essentially double my ~£45k gross salary. But best of all, I'll never have to deal with the absolute plum in accounting/HR ever again.

    This first gig is (unfortunately) through an intermediary, but I managed to pass a client interview to get onto a 6 mo contract which has been a decent confidence boost. I had originally set myself up an LTD, but I'll be operating as a sole trader at least for the next 6 months. I don't fully understand why the intermediary is wanting to deal with sole traders as opposed to an LTD (my understanding was that they'd be taking on more liability re: IR35 etc.), but hey ho, I'm just going for it since I'll be involved with some former workmates, and it won't feel as much like jumping into the complete unknown. Maybe an accountant will be able to shed some light on it once I get round to setting that up.

    Just wanted to say hello, and thanks for all the useful posts about getting yourself set up to start contracting. Time to sink or swim! (or be sent back to permie life by HMRC )
    Last edited by CynicalBroccoli; 5th October 2020 at 20:58. Reason: minor editing because me bad writer

  2. #2

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    Best of luck to you!

    Certainly sounds odd re the sole trader bit. Make sure you get a contract and have it reviewed, not just for IR35 (which is moot in a sole trader scenario as all earnings will go on your SATR), but more to check there isn't any other kind of gotcha going on.

    You've picked an interesting time to take the leap but it sounds like you've done the sensible thing and made sure you've got a few bob to fall back on.

  3. #3

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    Interesting = worst time contracting history.... Good luck.
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  4. #4

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    The sole trader thins is why we have IR35. Go back enough in your tax history and you will discover one idiot government moved the liability for defaulted tax payments up to the first incorporated body in the chain - in effect if you don't pay your taxes they have to - hence the insertion of YourCo to catch the liability.

    So working as a sole trader therefore carries the same risk, which is why most agencies won't touch you. As long as you are direct to the client, it doesn't really matter of course.

    Make sure you do get to understand all this arcane rubbish. It is actually very important. You have no idea how much you don't know...
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  5. #5

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    Good luck. 25 years too late, but good luck anyway.
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  6. #6

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    Quote Originally Posted by ladymuck View Post
    Best of luck to you!

    Certainly sounds odd re the sole trader bit. Make sure you get a contract and have it reviewed, not just for IR35 (which is moot in a sole trader scenario as all earnings will go on your SATR), but more to check there isn't any other kind of gotcha going on.

    You've picked an interesting time to take the leap but it sounds like you've done the sensible thing and made sure you've got a few bob to fall back on.
    Thanks. I think I will get it checked out. One thing I feel is dodgy already is that the day rate is inc. VAT. Agent said the clients I was being put forward for weren't VAT registered (which probably is true for at least 1 or 2 of the ones I know about), so they wouldn't be charging VAT either. But then I've ended up on a client that definitely is VAT registered.

    I'll speak to an accountant first, but I should be able to leverage sorting that quite easily after the initial 3 month contract with the agent. Current rate would put me just below the VAT threshold for the year, but I reckon I could be on a higher rate quite easily next year. I could likely negotiate a higher rate as well, but I've also got to keep the relationship with the agent in mind.

    Probably all moot due to IR35 anyway.

  7. #7

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    Quote Originally Posted by CynicalBroccoli View Post
    Thanks. I think I will get it checked out. One thing I feel is dodgy already is that the day rate is inc. VAT. Agent said the clients I was being put forward for weren't VAT registered (which probably is true for at least 1 or 2 of the ones I know about), so they wouldn't be charging VAT either. But then I've ended up on a client that definitely is VAT registered.

    I'll speak to an accountant first, but I should be able to leverage sorting that quite easily after the initial 3 month contract with the agent. Current rate would put me just below the VAT threshold for the year, but I reckon I could be on a higher rate quite easily next year. I could likely negotiate a higher rate as well, but I've also got to keep the relationship with the agent in mind.

    Probably all moot due to IR35 anyway.
    I feel like something is being misunderstood here by you. I am not sure how your client wouldn't be vat registered as hopefully they are earning above the 85k annually that requires it (how else will they pay you?!?). Not sure if there are any weird exemptions that i dont know about but that just doesn't seem right.

    Vat registration also benefits you. Do you want to pay vat on the things you are going to purchase for your business? I guess this depends on whether or not you will have any expenses and whether the client is paying them. If they are paying all your expenses then I guess there is no point if you will fall under the vat threshold.

    Probably talk to a professional and make sure your contract looks good and you are set up in the most tax efficient way possible.

  8. #8

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    Quote Originally Posted by TestMangler View Post
    Good luck. 25 years too late, but good luck anyway.
    That's a bit daft and implies I started out 10 years too late

    I'd say contracting is getting harder but there will always be something there for those that stick with it.

  9. #9

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    I was going to write something akin to saying I’ve jumped off the lifeboat and back onto the Titanic.

    But actually, good for you. Great result.

  10. #10

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    Quote Originally Posted by CynicalBroccoli View Post
    Following just over 3 years of being on HRs naughty list and suffering pure/concentrated existential dread brought on by permiedom (my new favourite word), I finally have enough savings to confidently take on the risks of potentially being out of work for a while. I can't explain how good it felt to hand my notice in and set up my LTD; a sense of freedom I've not really felt during my career thus far. Permie life felt like I had never left highschool on one too many occasions, or like I was an initiate in some whacky cult on others.

    I had given my employer a chance to keep me (with outrageous demands) and the response was, "at that salary you'd be within the top X% of devs within the company, and would be leapfrogging others". 2 weeks later and I've now lined up a gig which will essentially double my ~£45k gross salary. But best of all, I'll never have to deal with the plum in accounting/HR ever again.

    This first gig is (unfortunately) through an intermediary, but I managed to pass a client interview to get onto a 6 mo contract which has been a decent confidence boost. I had originally set myself up an LTD, but I'll be operating as a sole trader at least for the next 6 months. I don't fully understand why the intermediary is wanting to deal with sole traders as opposed to an LTD (my understanding was that they'd be taking on more liability re: IR35 etc.), but hey ho, I'm just going for it since I'll be involved with some former workmates, and it won't feel as much like jumping into the complete unknown. Maybe an accountant will be able to shed some light on it once I get round to setting that up.

    Just wanted to say hello, and thanks for all the useful posts about getting yourself set up to start contracting. Time to sink or swim! (or be sent back to permie life by HMRC )
    What does your contract say on payments ?


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