Ltd and PAYE: employed vs self-employed subcontractor

[p3t3]

Hi, I understand that lenders classify contracts set up through Ltd as "self-employed subcontractor" and thus being small businesses require 2-3 years of audited accounts to be able to apply for a mortgage.

I also understand that the "employed subcontractors" tend to enjoy much more relaxed terms from the standpoint of obtaining a mortgage and are treated as permanent employees, e.g. 3 months of statements.

I have a choice of signing a contract via a Ltd company or through the client's PAYE facility. Would the PAYE facility make me an "employed subcontractor" rather than "self-employed" from the bank's standpoint?

Apart from tax, any other important considerations that need to be taken into account?

Thanks.

[stek]

Ltd and PAYE: employed vs self-employed subcontractor

Do you have a decent war chest?

[Maslins]

If you're just starting out as a contractor, and getting a mortgage soon is a major priority, going PAYE will likely be the better option.

You'll struggle to get a mortgage until you've had at least a couple of decent years trading via a Ltd Co.

You will likely pay a little more tax in the meantime, but you get perks like paid holiday/sick etc too, so not all bad.

[p3t3]

Thank you Maslins

[DigitalUser]

Re: Ltd and PAYE: employed vs self-employed subcontractor

If you're just starting out as a contractor, and getting a mortgage soon is a major priority, going PAYE will likely be the better option.

You'll struggle to get a mortgage until you've had at least a couple of decent years trading via a Ltd Co.

You will likely pay a little more tax in the meantime, but you get perks like paid holiday/sick etc too, so not all bad.

Alternatively, go through a broker which deals with contractors. Google will help with this, and it's the route I'll be following when I purchase in the next year or so.

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