26 year old, new to contracting help!

[Guest]

Hi All,
I am looking to become an IT contractor. I have interviews for both an inside IR35 role and outside.
For arguments sake lets say they are both offering 450GBP a day for 6 months (lets say 120 days of work).
Therefore I get 450*120=54,000GBP sent to me.

My question is...
after setting up a company, what will I take home after withdrawing all the money from the "business" and putting it in my bank account. Do I pay dividend tax and then pay income tax after that since my dividends become income? **No idea**

Could I have a breakdown for both in and outside, I want to pay NI.

Thanks

[cojak]

Welcome to CUK.


You do not draw all the money from the ‘business’. If the contract is inside IR35, the umbrella is your employer and your salary goes straight into your personal account -it’s all yours because you paid all taxes on your rate. If the contract is outside IR35, it has to go straight into your business account you will have to pay corporation tax, NI and other outgoings yourself, and you will need an accountant to help you with this.

Use this calculator to see what you’ll inside IR35 (tax paid by umbrella)Umbrella Take Home Pay Calculator - Clarity Umbrella Ltd

And look at this one for outside IR35 (tax Paid by you) https://www.dolanaccountancy.com/

Before you go any further, go through all the guides here

First Timers Guides - for IT Contractors | Contractor UK

Then take a look at all the stickies in the Umbrella part of the forum.

You’ll learn a lot just going that.

[NowPermOutsideUK]

Some sound advice from cojak. At your age I would do it as when you are young is the time to take risk in your career.

If you have an outside role you have really done well and you should think about it. It opens up many possibilities and is liberating

Good luck

[Guest]

Right okay thanks cojak and NowPermOutsideUK, I will go through all them links and if the interviews go well and it begins to looks more apparent that I am about to land a contract I will reach out to a local accountancy firm.

Yeah I got my big break if you like in my current job which is now making me redundant due to covid. The outside IR35 role is for a company in Amsterdam and its remote.

[founder]

Also , buy lottery tickets, given you are so lucky

[malvolio]

(IF) it begins to looks more apparent that I am about to land a contract I will reach out to a local accountancy firm.

Don't, that's possibly a bad idea unless they can explain in some detail both IR35 and its latest iterations, can demonstrate they understand the nature of your business (which is not like a local shop) and can use something like FreeAgent to keep your bookkeeping straight and can cope with non-UK business interactions (which will be harder from Jan 1st regardless of what happens). There's a thread on recommended accountants, have a read of that.

[Old Greg]

Don't, that's possibly a bad idea unless they can explain in some detail both IR35 and its latest iterations, can demonstrate they understand the nature of your business (which is not like a local shop) and can use something like FreeAgent to keep your bookkeeping straight and can cope with non-UK business interactions (which will be harder from Jan 1st regardless of what happens). There's a thread on recommended accountants, have a read of that.

WHS

[Guest]

Hi,
Okay good news... but first I lied.
I did not have interviews lined up for the day rate contracts, I just wanted answers with this assumption as as there was the potential for these to go to the interview stage, turns out I don't have enough experience... I think the market is just flooded with overqualified candidates atm who are redundant etc.

Good news is after 2 weeks of looking for perm roles, I have secured a new role, fixed term (which is what I want) so in X months time when the market is better I can look again (probably for senior perm roles if I'm honest).

Thanks for the advice all.

[NotAllThere]

There was no need to lie. I hope you don't make a habit of it in your personal or professional life.

[Paralytic]

Hi,
Okay good news... but first I lied.
I did not have interviews lined up for the day rate contracts, I just wanted answers with this assumption as as there was the potential for these to go to the interview stage, turns out I don't have enough experience... I think the market is just flooded with overqualified candidates atm who are redundant etc.

Good news is after 2 weeks of looking for perm roles, I have secured a new role, fixed term (which is what I want) so in X months time when the market is better I can look again (probably for senior perm roles if I'm honest).

Thanks for the advice all.

Good luck in your made up new fixed term role.