New to all this, need advice.

[TheAnalyst]

Firstly thanks for taking the time to read my post.

I have just been offered a 3 month contract doing IT helpdesk support in Glasgow working for a large accounting firm, the rate is £14.25 per hour which is really good compared to my last job doing exactly the same thing for a measly salary of £13450 p/a.

There is every chance that the contract will be renewed for a further 3 months at the end of this too which is good.

Can anyone offer my advice about IR35 rules and roughly what my take home pay might be working a 38 hour week? I have read the FAQ etc but its all got me a bit confused.

Also the agency who I got the contract through have put me in touch with an umbrella company who will do all my tax/ni stuff on my behalf, not sure if this is the best way to do it though .......

Thanks in advance

TheAnalyst

[Mordac]

Depends who the Umbrella is. If it's 360 or Prosperity4, I personally wouldn't. They (allegedly) use all sorts of "unreceipted" expenses scams to make it appear you are better off going with them. When Hector comes a-knocking (which he will), you'll be buggered.
Some of the less reputable brollies offer back-handers to some of the less reputable agencies to send them their "green" contractors, just so you're aware.
Parasol are very good. OrangeGenie used to be but took their eyes off the ball.
Your contract is very likely to be inside IR35, based on the info given.
To gat an idea of your take-home whether inside or outside IR35, visit IR35 Calculator

[~Craig~]

Have a look on http://www.parasolitcalculator.co.uk/

or NoLongerLimited it will work it all out for you.

Good Luck with the new job

[Harrysp]

Same old flamin questions, cant we just post up a sticky pointing to all the FAQ's?

FFS

[absoft]

While the contract rate may look good at first sight, there are a lot of deductions; in particular Employers National Insurance of almost 20%, then you have to take off your own National Insurance and tax ! Also you won't get paid for holidays, bank holidays, or if you are sick. Now contractors can no longer pay themselves a low salary and high dividends and claim loads of expenses, its hardly worth contracting - imho.
For a good umbrella company, go with ParasolIT; I know people who have used them and are quite satisfied. They also include professional indemnity insurance in their fee which the umbrella I'm with doesn't - so I am going to change to them myself soon.

[malvolio]

Now contractors can no longer pay themselves a low salary and high dividends and claim loads of expenses, its hardly worth contracting - imho

Really - well I never knew that before... Been talking to Miler's accountant, perhaps?

For absolutely the last time, an umbrella can't return any more money that a discrete Limited Company can, since both have to stick to the same laws and taxation rules. In fact the umbrella will return slightly less, since you have to pay them to do things for you. The big thing an umbrella does do is take away all the uncertainty about IR35 status (becuase it won't apply, you're an employee of the umbrella) and all the year end compliance stuff. And, of course, for people just starting out, it's a good way to get going without risk until you learn how it all really works. That is their ONLY F***ING benefit.

And if you want to compare like for like, multiply your hourly rate by 10 and you will get the roughly equivalent gross annual wage for a permie - in the OP's case, around £14,250. Gross deductions will be the same, near as damnit, so he is a bit ahead of the previous, premie job - but not as much as he might imagine.

[Lucifer Box]

in particular Employers National Insurance of almost 20%

I wouldn't recommend you follow absoft's advice and pay employers' NI at almost 20%. If I were you I'd stick to the required 12.8% of earnings in excess of £94/week.

[threaded]

Don't bother with IT, go back to college and study law or accountancy. The IT age in the UK is over.

[Lucifer Box]

Burger flippers and shelf stackers. That's what we need.

[TheAnalyst]

Thanks guys for the advice but something does not add up right here, I'll explain ....

The umbrella company (Oxygen360) woman called me and explained loads of stuff to me, this included

Because im staying at my girlfriends for the duration of the contract im entitled to £30 tax free earnings per working day for accomodation, £26 for food (as with travel I will be away from the flat for over 10 hours a day), £5 for travel and £5 for random other stuff, the only thing I would need to show receipts for would be the travel.

She worked out that working a 38 hour week I would see nearly an 85% return after deductions after taking these expenses into account which equates to about £440 a week after they take their £30 a week fee, to me this is GREAT money!!!

But I'm getting the feeling im being taken for a fool by someone?