Hourly Rate - about to sign contract

[theroyale]

Got a contract with a stated hourly rate. No average no. of hours/expected no. of hours in a week is given. Only contract start and termination dates are specified. Also there is "all costings are excluding VAT."

Is this normally how it is in terms of no. of hours? Also what are the implications of the statement about VAT?

[worzelGummidge]

No it's not. The contract usually specifies the "usual" number of days per week or day - or - the Daily rate, sometimes based on the "usual" number of hours per day.

The agency sound a bit dodgy. I would ask for a proper contract or send then you amended one.
- or -
Take your sleeping bag in with you the first day and charge 24hours a day until Friday. i.e. fill your boots.

[mudskipper]

Got a contract with a stated hourly rate. No average no. of hours/expected no. of hours in a week is given. Only contract start and termination dates are specified. Also there is "all costings are excluding VAT."

Is this normally how it is in terms of no. of hours? Also what are the implications of the statement about VAT?

The excluding VAT just means that, if you register for VAT, you charge VAT on top of the rate. If you're not, you don't.

[Wanderer]

Is this normally how it is in terms of no. of hours? Also what are the implications of the statement about VAT?

Yes, it sounds fine. Just bill for the hours worked.

The VAT statement is that if your rate is 100 pounds per hour and you are NOT VAT registered then that's what you get. If you do register for VAT, you charge them 100/hour plus VAT @ 17.5% = 117.50 per hour and then you pay the extra 17.50 to HMRC.

However, if you register for the Flat Rate Scheme and charge 17.5% VAT and pay HMRC 12% of this, the other 5.5% is company profit!

[northernladuk]

Yes, it sounds fine. Just bill for the hours worked.

The VAT statement is that if your rate is 100 pounds per hour and you are NOT VAT registered then that's what you get. If you do register for VAT, you charge them 100/hour plus VAT @ 17.5% = 117.50 per hour and then you pay the extra 17.50 to HMRC.

However, if you register for the Flat Rate Scheme and charge 17.5% VAT and pay HMRC 12% of this, the other 5.5% is company profit!

And 1% discount for the first year so 6.5% in first year.

[mudskipper]

Yes, it sounds fine. Just bill for the hours worked.

The VAT statement is that if your rate is 100 pounds per hour and you are NOT VAT registered then that's what you get. If you do register for VAT, you charge them 100/hour plus VAT @ 17.5% = 117.50 per hour and then you pay the extra 17.50 to HMRC.

However, if you register for the Flat Rate Scheme and charge 17.5% VAT and pay HMRC 12% of this, the other 5.5% is company profit!

Not quite - you pay 12% of the £117.50 (£14.10) - so 'profit' is £3.40

[rootsnall]

Got a contract with a stated hourly rate. No average no. of hours/expected no. of hours in a week is given. Only contract start and termination dates are specified. Also there is "all costings are excluding VAT."

Is this normally how it is in terms of no. of hours? Also what are the implications of the statement about VAT?

Sounds good to me. It gives you free reign to get the hours in when it suits you.

[theroyale]

Sounds good to me. It gives you free reign to get the hours in when it suits you.

Great, I do like the sound of that.

The excluding VAT just means that, if you register for VAT, you charge VAT on top of the rate. If you're not, you don't.

So do I need to register for VAT? (or not?)

Also with this IR35 business... I've gone through the articles and looks like there's a fairly clear Substitution clause. However my contract doesn't at this point state what work I'll be doing - the space for that is completely blank (it was discussed at interview of course). I do need to get the agency to fill that in right? My understanding of IR35 is that one the main clauses that keeps you out of IR35 is just this - the work/projects to be executed needs to be clearly outlined in your contract.

First-time contracting, do correct me if I'm wrong with any of this... thanks

[Scrag Meister]

VAT Introduction
If you earn over 70k you need to register for VAT.

Flat Rate VAT Scheme

More Flat Rate Info including table of Flat Rates for each industry
For IT Consultancy etc the VAT Flat rate is 13% of gross. Although with the first year discount that is 12%, assuming you are just starting up.


Work those hours!! :-)

[theroyale]

VAT Introduction
If you earn over 70k you need to register for VAT.

Flat Rate VAT Scheme

More Flat Rate Info including table of Flat Rates for each industry
For IT Consultancy etc the VAT Flat rate is 13% of gross. Although with the first year discount that is 12%, assuming you are just starting up.


Work those hours!! :-)

Scragmeister Thanks for that - I'm well under 70k so wouldn't apply to me anytime soon