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First contract advice: Fixed-term contract invoicing limited company

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    First contract advice: Fixed-term contract invoicing limited company

    Well... this is my first post, can I say what a great resource this has been so far, and thanks to all the people who have posted here.

    I'd really appreciate some advice on a potential first contract offer, I have of course searched here and read a lot about fixed-term contracts being evil but I think this a slightly uncommon case (or I'm just completely misunderstanding it!). I can only offer to help someone out on the forums once I have some experience.

    So, after 15 years as a permanent employee (software engineer) I am seeking my first contract. I recently interviewed with a local company for a short 3 month contract - I didn't actually have the skills particular to the work but they seemed interested in me.

    They later offered me a £50,000 permanent position which I humbly declined purely as I'm set on contracting, but they seem keen for me to work for them so the agency is trying to shuffle it around to an equivalent pro-rata fixed-term contract.

    So we are currently discussing a 6-month fixed-term contract at £250 a day working four days a week (100 days in total). The four day week was a way of them shuffling the holiday entitlement around in a way convenient to me (this is probably more attractive to me than working a full week with the extra pay).

    I like the company, the work looks interesting and great for my CV (objective-C). If it was something less attractive I wouldn't be giving the pro-rata rate much thought and trying for something better (although I'm also aware it's my first contract so am willing to work my way up).

    At this point, from researching this forum, I see that fixed term contracts are generally considered the worst of both worlds.

    However, I have been told that the company can pay me PAYE or invoice my (prospective) limited company - perhaps I'm completely misunderstanding this but if I set up my limited company as planned is this is effectively comparable to any other £250 daily rate 'standard' (non fixed-term) contract I may consider?

    If so, although the rate is below average, it's local, a good length, a chance to learn a new programming language, and gives me a valued day off which I can later potentially fill with some work from home with my previous employer (although I realise this may have IR35 implications).

    From researching here I understand there are other implications of being under a fixed-term contract which I am going to investigate more, but on the face of it, am I crazy even considering going against all the negative fixed-term contract advice on here? I feel I'm probably missing or misunderstanding something...

    Many thanks!
    Alex

    #2
    Sorry to break it to you but you arent going contracting. You are entering into a Fixed Term Employment Contract if they will pay you PAYE. If they do this you will have a gross daily wage of £250 out of which they will deduct tax and NI. You may be opted in to any stakeholder pension too.

    If they are offering to invoice your company, are they expecting you to pay them? Seriously, I think you mean you will invoice them £250 per day, £1000 a notional week. Out of this, you will be responsible for you own tax affairs, corporation tax and VAT if you decide to register.

    This is beneficial because you can pay yourself any amount, the lower you pay yourself, the less tax and NI you pay, your limited can reimburse you for wholly and exclusive expenses you've incurred and pay yourself dividends when you need to.

    The contracts should be worded differently if FTeC or Ltd contract.

    Limited company contracts are not called FTC or FTeC. They are just 'contracts.'
    Last edited by BolshieBastard; 12 March 2015, 20:42.
    I couldn't give two fornicators! Yes, really!

    Comment


      #3
      The girl who brings my coffee is on £350 a day - PMO

      You need to double your rate

      Comment


        #4
        Originally posted by tarbera View Post
        The girl who brings my coffee is on £350 a day - PMO

        You need to double your rate
        Back in the glory days of the BT Spine cash cow I had a brew brought to me by a £1600 a day contractor PM. Alas now it's £18k a year PM's (i.e. recent Grads) and the coffee is nowhere near as well planned and documented in MS Project....

        Comment


          #5
          Thanks for the replies. I think I understand the source of my confusion now.

          Comment

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