New to contract work..pls advise

[sdyson31]

Hi,

I am an IT professional and new to contract work. I have a 12 month contract option in public sector, it will be a 3 month rolling contract and would last for at least an year or more.

I have looked into new government regulation on contract work in public sector which i believe will come into effect from April 2017. I have been using online calculator to get an idea about my anuual income but that doesn't include accountant fees and other expenses. I know little about ltd company and umbrella company.

I secure the contract through an agency, and agency is offering me £260 per day rate. Don't know if £260 is with or without VAT?

Can anyone pls advise me that how much roughly i will be earning per month after all taxes , vat, accountant fees and expenses? Lets say if my day rates are £260 and patrol cost will be around £10 per day. Accountant cost £700 to £1200 per year.

[cojak]

Welcome!

You'll find a lot of answers to your questions within the CUK website.

On the right you'll find CUK Navigation. >>>>>>>>>

Look down and you'll come to the First Timers section. Have a read through there.

Umbrella or Ltd? Look here: Setting up your company - Ltd or Umbrella?

Basic expenses questions answered here: Contractor Expenses - How to claim Travel and other expenses via Limited Company or Umbrella

Then pay particular attention to IR35.

And here are the rules when using company credit cards: http://www.hmrc.gov.uk/payerti/exb/a-z/c/cards.htm

If you go into the Accounting/Legal forum you'll discover the thread Basic advice when running your own contractor business.

Guide to Contracts also has some good articles.

Do you want advice on the state of the contract market for your specialism/location? Have a look at this website; it will answer most if not all of your questions: IT Jobs Watch, Tracking the IT Job Market

And finally - accountant recommendations - Ta-da!

Happy reading!

[PerfectStorm]

I have a 12 month contract option in public sector, it will be a 3 month rolling contract and would last for at least an year or more.

A tip - don't bank on it lasting more than 3 months at a time, and strictly speaking, you can be asked to leave tomorrow. That's part of the risk we all take on.

[sdyson31]

A tip - don't bank on it lasting more than 3 months at a time, and strictly speaking, you can be asked to leave tomorrow. That's part of the risk we all take on.

Thanks for the heads up. Does it happen a lot?

[bobspud]

Thanks for the heads up. Does it happen a lot?

Yes.

[mudskipper]

Hi,

I am an IT professional and new to contract work. I have a 12 month contract option in public sector, it will be a 3 month rolling contract and would last for at least an year or more.

I have looked into new government regulation on contract work in public sector which i believe will come into effect from April 2017. I have been using online calculator to get an idea about my anuual income but that doesn't include accountant fees and other expenses. I know little about ltd company and umbrella company.

I secure the contract through an agency, and agency is offering me £260 per day rate. Don't know if £260 is with or without VAT?

Can anyone pls advise me that how much roughly i will be earning per month after all taxes , vat, accountant fees and expenses? Lets say if my day rates are £260 and patrol cost will be around £10 per day. Accountant cost £700 to £1200 per year.

It's all change in the public sector from April '17.

You need to understand about IR35. If your contract is not likely to fall outside IR35, then you are probably best to go through a brolly - it's not worth messing about with a limited company, given that after April 2017 it is likely that tax will be deducted at source.

If you believe you are outside of the scope of IR35, then limited is an option - but after April 2017 that decision will fall to the client, not the contractor. It is difficult to know what might happen if you have claimed to be outside of IR35, and the client subsequently says you are not.

If you are inside IR35, or operating through a brolly*, then you cannot claim travel and subsistence from April this year (2016)

So the key is IR35 - and given that it is public sector, it is probably something you need to talk to the client about, as they will be making the call going forward.

* unless you can prove that you are not under Supervision, Direction or Control

[heyya99]

If you believe you are outside of the scope of IR35, then limited is an option - but after April 2017 that decision will fall to the client, not the contractor.

Am I correct in saying this only applies to the public sector?

[sdyson31]

Just gone through IR35 checker and it says strongly failed and i am inside IR35. Does it mean i don't have ltd option?

Also looked at Contracting Calculator - Results (inside IR35) and it seems its not worth doing contract work if inside IR35 as i can earn 53k in permanent role.

[northernladuk]

Just gone through IR35 checker and it says strongly failed and i am inside IR35. Does it mean i don't have ltd option?

You do but it won't be any more efficient than going brolly. Maybe a little more but it won't worth commenting on.

Rolling contract in the public sector it not surprising you failed and i bet that's just for starters.

[b0redom]

If you can earn £53k as a permie, but only ~ £260 as a contractor, stay permie IMO. There's lots of things you haven't budgeted for. Time off, sick days, training, pension, insurance, legal fees, accountancy fees etc. They all add up very quickly. Assuming 200 billable days at £260/day you're only bringing in £52k gross and that's before all of the above.