Ltd company/IR35 issues

[Shanshan]

Thanks again for your help.

One more question I have is regarding the difference in hourly rate charged. In my view, my moving from PAYE to Ltd provides a saving to the client.

I estimate the savings for the client to be 12.67% (30 days annual leave pa forgone), 14% (employer pension contribution forgone) plus 12.8% (employers NI forgone). Coming to 39.47%, is this correct?

Is it reasonable for this saving to be shared 50/50 ie. my rate increase by appro 20% and in turn they will have a saving of approx 20%.

Also what are the payment days on your invoices? I'll probaly invoice fortnightly and have 14 days to pay. Is this reasonable?

In regards to PCG membership, is the standard membership enough? Or is the Plus membership worth the extra?

Thanks

[NotAllThere]

In IT, I'd expect as a rule of thumb a permie salary of £30K to equate to £30 an hour or £300 a day. Now that varies according to skill set, sector etc.

By taking on a contractor the employer benefits in a number of ways, which have to be offset against the higher rate, and against the admin cost of handling your invoices:

1. No ERNIC
2. No payroll costs
3. No pension
4. No insurance
5. No sick pay
6. No holiday pay
7. No employment rights
8. Often, no or small notice period

You can see from this that many of the points wouldn't be included in your calculation. They're saving far more than ERNIC, pension and holiday pay. On the other side, you've got additional costs.

1. Pension
2. Insurances
3. Accountant fees
4. Covering time on the bench
5. Tax investigation costs

I'd start negotiating at double what you're currently getting, with the above grounds. What you settle for is up to you. A 20% uplift simply isn't worth it.

[Shanshan]

One additional question I have is regarding what insurance to get. So at this stage:

1) I am the sole employee of a Ltd company that I am 100% shareholder of.
2) I'm a member of PCGplus and thus get some insurance cover there.
3) Currently I have 1 client.

Should I get professional indemnity, employers liability & public liability insurance? I will probaly go down the Qdos channel as they look well respected.

Thanks

[TykeMerc]

One additional question I have is regarding what insurance to get. So at this stage:

1) I am the sole employee of a Ltd company that I am 100% shareholder of.
2) I'm a member of PCGplus and thus get some insurance cover there.
3) Currently I have 1 client.

Should I get professional indemnity, employers liability & public liability insurance? I will probaly go down the Qdos channel as they look well respected.

Thanks

As to supplier of insurances take your pick, but in my opinion you should get them. Odds are you will never need them, but if you do they're worth having. Plus some clients and agents won't take you on unless you can demonstrate that you have them in place.
My memory's a bit weak and I haven't time to look it up, but I have a strong feeling Employers Liability is obligatory by law anyway, happy to be corrected on this.

[the_rangdo]

I may be wrong but I think employers liability rules were relaxed so a LtdCo where the director is also the sole employee doesn't require it.