Initial contract

**jmo21** · 23 February 2010, 22:16

Om nom nom! feed de troll!

**ntl737** · 23 February 2010, 22:22

Excuse me?

Excuse me? Why do you think this cannot be genuine?

**BenchMaster** · 24 February 2010, 00:41

Originally posted by ntl737 View Post

I have just been offered a short-term(1 month) contract starting on Monday. The rate is nothing close to what is advertised on itjobswatch.

Should I go the PAYE or the limited company route?

I've tried a few calculators and the difference in take home is quite large but I don't want to do the paperwork at least initially. Also, I'd like to know a few calculators that will give me the approximate take-home pay. Can someone recommend a calculator?

Also, since my very long commute will be costing me a lot(>20 a day), can I reduce my taxes by claiming these as expenses?

Also, I'd like to know if I am inside or outside IR35. I asked the HR manager and he was not sure.

Thanks in advance!

You'll have to realise that many of the contributors to this forum are hardened contractors who haven't got the patience to answer questions from newbies who they think haven't bothered to use the search facility or to read the first timers guide listed on the righthand side of this page.

I've got a bit of time on my hands, so I'll try to address some of your questions.

Regarding the disparity between the rate offered and that advertised by itjobswatch, there really shouldn't be any difference between the 2 figures - certainly not more than 2 or 3% difference. I would go back to the company and point this out to them. If they try to fob you off, then I would raise the matter with itjobswatch.

The decision to use a Ltd co or an umbrella depends on whether you expect to be contracting for longer than 1 month. If you are planning to go back to a permy position after this short contract, than it will probably be best to go with an umbrella.

I expect you have been using one of those old Texas Instruments jobs (ti30?). You should get better take-home calculations with something more modern. It doesn't have to complicated - something simple like a Casio SL-1100TV or a Sharp EL-344R should give good results.

You should definitely be claiming your travelling expenses in order to reduce your tax rate. In fact, many of the popular umbrella schemes require you to do this in order for them to guarantee the best effective tax rates of 15 or 16%.

Your IR35 status really depends upon the details of your new contract of employment. Things like the right of HR to substitute someone else to do your job, whether the company is expected to impose a rate cut - and whether you are obliged to accept any rate cut, and the amount of direction and control you are given over any other contractor working there are the main factors in determining your IR35 status. Without knowing the full terms of your contract and seeing the detail from the staff handbook, which HR should provide on your first day, it's impossible to give a definitive assessment of your status.

Hope this helps.

**NickFitz** · 24 February 2010, 02:15

What BenchMaster said, with one additional point: if you go the umbrella route, rather than forming your own limited company, then although you can still claim back your travel expenses before tax, the rest of your contract earnings would be taxed as normal under PAYE by the umbrella. In that case, IR35 becomes irrelevant, so if you go that route it's one less thing to be concerned about.

I would definitely second the idea of using an umbrella if you aren't planning to continue in contracting; even if you plan to continue, it might be worth using an umbrella for this one-month contract, as that will give you plenty of time to read the first-timer guides (links on the right...) and decide whether to then set up your own limited company.

Oh, and congratulations on the gig

**malvolio** · 24 February 2010, 08:11

And just for contrast, my current gig is costing around £500 a week in expenses. If you think £20 is a lot, you're in the wrong trade!

**chef** · 24 February 2010, 08:19

1st
contractor calculators can easily be found to your right (on the screen not literally to your right) ----->

Do you see the CUK Navigation blue box near the top right hand corner? ok
look down a bit
yep past Home, News, Contractor Alliance
oh lordy lord what's the next one? Calculators.. well how about that..

2nd
a very simple rule, if its a wholly and exclusive business expense (i.e you would not have spent that money unless you were undertaking business/work e.g trains, taxi's, flights, hotels, post it notes, printer etc.) EXCLUSING CLOTHES/SUITS/SHOES and any other item that Mr Taxman could argue that the money wasn't spent exclusively on business related items then it is claimable as a business expense

3rd
as stated previously, please use the search BEFORE you ask general questions as they almost all have been asked before and I for one don't see why I should hand hold you and nanny you in the most basic of stuff especially when I did the hard work and searched/looked myself and learnt as I have gone along to pass on this knowledge to someone as lazy as yourself. If you think this is a harsh attitude to take you're really not cut out to contract. I say this because unless you become thick skinned you WILL become the scape goat for a failing system, you wont get paid on time and you will get eaten alive by agents who will sell you every line going to reduce your rate and increase their profits. Also, if you can't be bothered to find out yourself about the most basic of things then you're also likely to miss things such as legal requirements i.e filing tax returns on time, vat returns, ensuring you have valid insurance etc. and so I would think twice if contracting is really for you.

I hope this serves as a bit of a wake up call... oh and welcome

, come join us in General

**ntl737** · 24 February 2010, 09:06

Thanks

Originally posted by BenchMaster View Post

You'll have to realise that many of the contributors to this forum are hardened contractors who haven't got the patience to answer questions from newbies who they think haven't bothered to use the search facility or to read the first timers guide listed on the righthand side of this page.

I've got a bit of time on my hands, so I'll try to address some of your questions.

Regarding the disparity between the rate offered and that advertised by itjobswatch, there really shouldn't be any difference between the 2 figures - certainly not more than 2 or 3% difference. I would go back to the company and point this out to them. If they try to fob you off, then I would raise the matter with itjobswatch.

The decision to use a Ltd co or an umbrella depends on whether you expect to be contracting for longer than 1 month. If you are planning to go back to a permy position after this short contract, than it will probably be best to go with an umbrella.

I expect you have been using one of those old Texas Instruments jobs (ti30?). You should get better take-home calculations with something more modern. It doesn't have to complicated - something simple like a Casio SL-1100TV or a Sharp EL-344R should give good results.

You should definitely be claiming your travelling expenses in order to reduce your tax rate. In fact, many of the popular umbrella schemes require you to do this in order for them to guarantee the best effective tax rates of 15 or 16%.

Your IR35 status really depends upon the details of your new contract of employment. Things like the right of HR to substitute someone else to do your job, whether the company is expected to impose a rate cut - and whether you are obliged to accept any rate cut, and the amount of direction and control you are given over any other contractor working there are the main factors in determining your IR35 status. Without knowing the full terms of your contract and seeing the detail from the staff handbook, which HR should provide on your first day, it's impossible to give a definitive assessment of your status.

Hope this helps.

Thanks all for your responses.

Actually, I did go through the beginners information, but it is so overwhelming - even reading all the links and the experience of first timers etc - and this came out of nowhere all of a sudden! That's why I decided to post just to confirm. Thank you and I didn't mean to waste anybody's time.
The other thing is that the other gigs are permanent and I didn't expect to get a contract here.

As far as the rate goes, the rate offered is 60% of the average rate on itjobswatch for the past 3 month period.

I tried the following calculators

That GBP 20 I mentioned is only cost of transportation. Here it is expensive! And my commute will be almost 4 hours back and forth!

Thanks again, i hope to see the paper contract soon!

**ntl737** · 24 February 2010, 09:18

Originally posted by chef View Post

1st
contractor calculators can easily be found to your right (on the screen not literally to your right) ----->

Do you see the CUK Navigation blue box near the top right hand corner? ok
look down a bit
yep past Home, News, Contractor Alliance
oh lordy lord what's the next one? Calculators.. well how about that..

2nd
a very simple rule, if its a wholly and exclusive business expense (i.e you would not have spent that money unless you were undertaking business/work e.g trains, taxi's, flights, hotels, post it notes, printer etc.) EXCLUSING CLOTHES/SUITS/SHOES and any other item that Mr Taxman could argue that the money wasn't spent exclusively on business related items then it is claimable as a business expense

3rd
as stated previously, please use the search BEFORE you ask general questions as they almost all have been asked before and I for one don't see why I should hand hold you and nanny you in the most basic of stuff especially when I did the hard work and searched/looked myself and learnt as I have gone along to pass on this knowledge to someone as lazy as yourself. If you think this is a harsh attitude to take you're really not cut out to contract. I say this because unless you become thick skinned you WILL become the scape goat for a failing system, you wont get paid on time and you will get eaten alive by agents who will sell you every line going to reduce your rate and increase their profits. Also, if you can't be bothered to find out yourself about the most basic of things then you're also likely to miss things such as legal requirements i.e filing tax returns on time, vat returns, ensuring you have valid insurance etc. and so I would think twice if contracting is really for you.

I hope this serves as a bit of a wake up call... oh and welcome

, come join us in General

I understand your frustration and I certainly don't mean to waste other people's time!
Filing Tax returns on Time - Never missed a deadline!
I read about the first timers guides as well. That' how I figured the IR35 stuff. And did the calculators, but got a difference as much as 40% on take home pay.
Valid insurance, Vat returns - I'll give you that, I still have to get more info. about these.

Thanks!

**Wanderer** · 24 February 2010, 09:46

Originally posted by ntl737 View Post

Should I go the PAYE or the limited company route?

For a 1 month contract, go Umbrella. Find one with a really good expenses policy and absolutely rip it by expensing everything you can. Claim a load of money for subsistance too. Take the most liberal interpretation of the expenses that you can get away with. Don't go spending money just to claim it on expenses though - that's cutting your nose off to spite your face. It's only a month so it's not like you'll get investigated for it. The worst that they will do is decline some of your expenses.

If it goes well and you are still contracting in 6 months time then get a Ltd, there are lots of ongoing costs of running a Ltd so it's not worth it for less than 6-12 months even considering the tax avoidance you can do with a Ltd.

Initial contract