Should I go Ltd?

[kaiser78]

I don't agree with the last paragraph at all. I've had three mortgages and a renewal as a LTD and the Halifax one I'm on took zero effort to get and us on a rate that beats most normal products.

Agree - I have never had a problem getting a mortgage as a LTD.

[m0n1k3r]

I don't agree with the last paragraph at all. I've had three mortgages and a renewal as a LTD and the Halifax one I'm on took zero effort to get and us on a rate that beats most normal products.

I am with Halifax as well. Although the interest rate is almost the same as for employees, they require 10% more deposit from people with mainly non-PAYE income.

[northernladuk]

A contractor is always a contractor in the eyes of a client. The umbrella is also a LtdCo, only that it's not yours and you don't have to administer it. Take-home wise, after the introduction of the dividend tax on the 6th of April this year I made some calculations taking corporation tax, dividend tax, income tax, national insurance etc into account and made some comparisons between going all PAYE and LtdCo-style small salary and large dividend. The difference in take-home (not counting the cost of running the company) is nowadays not more than around 11.5% on an annual gross fee of £100k, in practice a bit less.

A plus side going umbrella is that it is far easier to get a good mortgage and it also tend to attract more favourable terms.

I don't agree with the last paragraph at all. I've had three mortgages and a renewal as a LTD and the Halifax one I'm on took zero effort to get and us on a rate that beats most normal products.

[m0n1k3r]

Thanks all.

The contract is different from what I was previously doing - more senior position, more responsibilities, and on a single project, but its not a million miles away. It'll have been just over 12 months since I left.

I think in reality while the chances of being investigated are low, and even though I can do it all by the book (working practices outside IR35, insurance, etc.), it still creates an uncertainty that I guess I'm not comfortable with. Not at the moment anyway... perhaps in a year or so when I'm more battle-hardened I suppose fundamentally I'm happy with the money and I like the simplicity of working through an umbrella. I have the niggling feeling I'm not a proper contractor unless I'm Ltd, but that feels like peer pressure to me, so I'm weighing things up on their merits. In this instance I can't see a case for it, and doesn't sound like anyone else does either?

A contractor is always a contractor in the eyes of a client. The umbrella is also a LtdCo, only that it's not yours and you don't have to administer it. Take-home wise, after the introduction of the dividend tax on the 6th of April this year I made some calculations taking corporation tax, dividend tax, income tax, national insurance etc into account and made some comparisons between going all PAYE and LtdCo-style small salary and large dividend. The difference in take-home (not counting the cost of running the company) is nowadays not more than around 11.5% on an annual gross fee of £100k, in practice a bit less.

A plus side going umbrella is that it is far easier to get a good mortgage and it also tend to attract more favourable terms.

[tweird]

Thanks all.

The contract is different from what I was previously doing - more senior position, more responsibilities, and on a single project, but its not a million miles away. It'll have been just over 12 months since I left.

I think in reality while the chances of being investigated are low, and even though I can do it all by the book (working practices outside IR35, insurance, etc.), it still creates an uncertainty that I guess I'm not comfortable with. Not at the moment anyway... perhaps in a year or so when I'm more battle-hardened I suppose fundamentally I'm happy with the money and I like the simplicity of working through an umbrella. I have the niggling feeling I'm not a proper contractor unless I'm Ltd, but that feels like peer pressure to me, so I'm weighing things up on their merits. In this instance I can't see a case for it, and doesn't sound like anyone else does either?

[VectraMan]

Make sure you can (truthfully) answer the pre-requisite questions for the QDOS TLC35 insurance (there's something about your client being your employer in the last 12 months so if it's longer ago than that you should be ok)

Stats are that the chance of investigation is around 1/1000, and no one has ever lost an IR35 case with QDOS TLC35

But presumably QDOS don't insure anyone they consider likely to lose.

What are you doing for your previous employer? If it's exactly the same, you're probably screwed. If it's something entirely different you might be fine.

[pr1]

Anyone ever lost with IPSE?

not that I know of, but I'm pretty new

[psychocandy]

Make sure you can (truthfully) answer the pre-requisite questions for the QDOS TLC35 insurance (there's something about your client being your employer in the last 12 months so if it's longer ago than that you should be ok)

Stats are that the chance of investigation is around 1/1000, and no one has ever lost an IR35 case with QDOS TLC35

nluk will be able to give you a link so he can get some amazon vouchers

Anyone ever lost with IPSE?

[pr1]

I'm about to finish my first 6 month contract and currently lining up my next. I've been using an umbrella thus far, no complaints. The next contract is paying a better rate (£350/d) and makes the idea of going ltd more appealing, but not sure if its right for me because: a) my new client is a previous employer, so may raise the IR35 flag, and b) I'd like to take breaks of a few months between contracts, and not sure if having a Ltd Co will be a noose around my neck.

Newbie questions:
1. When between contracts (intentionally or otherwise), I assume I must still pay my accountant to keep the company ticking over (quarterly VAT etc?). Guess this is a negligible cost, but still a cost.
2. Lets say I have an IR35-friendly contract and my working practises match, yet I get investigated due to previously working for my client. Doesn't having the QDOS IR35 insurance completely mitigate the risk (assuming I'm covered to the appropriate level)? If so, given the proportionally small number of IR35 cases brought and the availability of IR35 insurance, how is IR35 even a concern?

Any advice appreciated.

Make sure you can (truthfully) answer the pre-requisite questions for the QDOS TLC35 insurance (there's something about your client being your employer in the last 12 months so if it's longer ago than that you should be ok)

Stats are that the chance of investigation is around 1/1000, and no one has ever lost an IR35 case with QDOS TLC35

nluk will be able to give you a link so he can get some amazon vouchers

[SueEllen]

1. Yes. The yearly fee is divided in to 12 to make it easy for you.

2. What HMRC do is terrorise you and ask inappropriate questions as they are digging for evidence. Then when they realise they won't win after a few years of causing you extreme stress they drop your case. If you search the forums there is at least two posters who have had this experience.

[northernladuk]

IR35 is a concern because of the massive potential fall out if you get caught. The actual investigation can take a couple of years so even if you win thats a lot of stress. If you don't you could end up paying 100's of K back. It doesn't take much effort to understand it and do what you can to mitigate it so it's a bit silly not to do it really.

There are a lot of 'ifs' in number 2 and it's not often that straight forward. On top of that if you ignore IR35 a newbie could quite easily make themselves part and parcel of the clients organisation and put themselves inside without knowing.

[tweird]

I'm about to finish my first 6 month contract and currently lining up my next. I've been using an umbrella thus far, no complaints. The next contract is paying a better rate (£350/d) and makes the idea of going ltd more appealing, but not sure if its right for me because: a) my new client is a previous employer, so may raise the IR35 flag, and b) I'd like to take breaks of a few months between contracts, and not sure if having a Ltd Co will be a noose around my neck.

Newbie questions:
1. When between contracts (intentionally or otherwise), I assume I must still pay my accountant to keep the company ticking over (quarterly VAT etc?). Guess this is a negligible cost, but still a cost.
2. Lets say I have an IR35-friendly contract and my working practises match, yet I get investigated due to previously working for my client. Doesn't having the QDOS IR35 insurance completely mitigate the risk (assuming I'm covered to the appropriate level)? If so, given the proportionally small number of IR35 cases brought and the availability of IR35 insurance, how is IR35 even a concern?

Any advice appreciated.