U.S Contractor working in the UK / Mortgages & Other Questions

[jennifertownsend]

Hi Everyone.

I have been contracted to a U.S tech company for over 2 years and recently got a pay rise to 75k.

My first question was tax-related since my last tax submissions have been done as self-employed/sole trader. Is it time now to go legit and get an accountant to sort out registering as a ltd company? I was wondering in a nutshell what the main benefits are and how much I could expect to save or what the other perks are.

My second questions was just around mortagages. I really wanted to buy my first home this year but worry I'm going to get shafted because I'm a contractor with most banks. Does anyone have experience of applying for a mortgage as contractor and what the experience is like and what they ask for? I'm trying to prepare myself for the worst and just resign myself to renting for the next couple of years.

Thanks, Jen.

[WordIsBond]

Hi, Jen. If that's your real name you might want to ask a moderator to change it for you, not necessarily a good idea to give personal info too broadly.

Before going Ltd you want to read up on IR35. Chances are good that you'll be able to structure things to be outside IR35 -- foreign contracts are not necessarily outside IR35 but they usually are.

If you are not outside IR35 you gain little by forming a limited company, from a tax perspective. There's obviously the liability protection if things go wrong between you and your client, or one of their clients, and you get sued in an American court. Then, the liability protection of a Ltd may be worth a lot.

If you are outside IR35, under the current tax laws you can save a substantial amount of tax.

If you are an American citizen, you have to think about US taxes, too. And you can end up in a world of hurt if you form a Ltd and don't know what you are doing. Controlled Foreign Corporation (CFC), Form 5471, etc. Be careful here.

But that's getting ahead of ourselves. The first thing is the IR35 assessment. If you are going to be inside IR35, it probably doesn't make sense. Check the link on the sidebar -> on IR35 and make sure you understand how it relates (or doesn't) to your contract.

If you are going to be outside, then come back and search the site for info on Americans contracting in the UK, there's some pretty useful threads here on that.

All the best.

[northernladuk]

The mortgage market has changed over the last few years and quite a few lenders are offering mortgages to contractors/freelancers based on rates not income.

Speak to Freelancer Financials on 020 8421 7990. They will do the legwork for you. I've used them for a number of mortgages including one that completed yesterday. The rates for freelancers are comparable, if not better, than most of the normal products so you won't get shafted jsut because your situation is a little different.

[GhostofTarbera]

Hi Everyone.

I have been contracted to a U.S tech company for over 2 years and recently got a pay rise to 75k.

My first question was tax-related since my last tax submissions have been done as self-employed/sole trader. Is it time now to go legit and get an accountant to sort out registering as a ltd company? I was wondering in a nutshell what the main benefits are and how much I could expect to save or what the other perks are.

My second questions was just around mortagages. I really wanted to buy my first home this year but worry I'm going to get shafted because I'm a contractor with most banks. Does anyone have experience of applying for a mortgage as contractor and what the experience is like and what they ask for? I'm trying to prepare myself for the worst and just resign myself to renting for the next couple of years.

Thanks, Jen.

Who pays you ? The tech company directly into your business account without taking any tax ?


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