Going back to ex-employer as contractor

[rt5mrt]

Thank you all!

I'm going to go ahead with the contract. Your answers have helped calm my nerves tremendously.

Here's to a lot of money! (couldn't resist that banana!)

[oraclesmith]

Thanks for your answers. From reading around this forum, I figured it's better to have your own company, but in my case [ie. trying to avoid IR35] will it then be better to just be part of the umbrella company?

IR35 isn't an issue at all if you are with a brolly, because they pay your tax to HMRC as if you were their employee. In other words, it's not very tax efficient.

The limited route is tax efficient, but there is a risk of falling foul of IR35 and other legislation which is intended to prevent disguised employment.

If you are limited and have a direct contract with your old employer (no EB) then the chances are you have enough control over the contract and your working conditions to stay well outside IR35. ie. they will be more amenable to contract terms which avoid mutuality of obligation and other employment pointers. It sounds like you are on to a good thing, but you still need to decide what to do beyond the first contract.

PS. if the old employer is looking to keep you on for a very long time (eg. like a permie) then you may end up having IR35 issues - eventually.

In my opinion

[The Lone Gunman]

Thanks for your answers. From reading around this forum, I figured it's better to have your own company, but in my case [ie. trying to avoid IR35] will it then be better to just be part of the umbrella company?

Are there any calculators that compare taxes paid when having own company and those paid by brolly company?

Thanks again.

Links around somewhere here. Try over there -> top right

[rt5mrt]

In any case, IR35 is only an issue if you set up a limited company or LLP/sole trader. If you don't want to do this, you can use an umbrella and get taxed as if you were a PAYE employee (which you are - of the brolly).

Thanks for your answers. From reading around this forum, I figured it's better to have your own company, but in my case [ie. trying to avoid IR35] will it then be better to just be part of the umbrella company?

Are there any calculators that compare taxes paid when having own company and those paid by brolly company?

Thanks again.

[oraclesmith]

3) if I do get caught by it and pay exorbitant taxes, roughly how much take-home pay can I expect to make, so I can give Company B a number for a pay raise?
thank you!

The tax you might pay if you are deemed-employed isn't any more exorbitant than you currently pay on PAYE, except that you aren't used to paying 40% on anything over the UEL.

In any case, IR35 is only an issue if you set up a limited company or LLP/sole trader. If you don't want to do this, you can use an umbrella and get taxed as if you were a PAYE employee (which you are - of the brolly).

Going out as a contractor requires a little more thought than a comparison of pay. It's more of a lifestyle decision. Ask yourself whether you actually want to be a contractor.

In my opinion.

[Flat Eric]

My questions are:
1) will I get caught by the dreaded IR35?
2) is there a way of getting out of it?
3) if I do get caught by it and pay exorbitant taxes, roughly how much take-home pay can I expect to make, so I can give Company B a number for a pay raise?
thank you!

1) It depends on your contract and the actual role you'll be undertaking for the client.

2) Possibly, refer to answer 1)

3) @ £250/day, that's approx £60k/year so if your inside IR35 you'll pay taxes roughly to that effect.

[rt5mrt]

Hello people, I'm a first time contractor so forgive me if these are silly questions.

My situation is that I used to work for Company A as a permanent employee for about 1 year and 9 months. I joined Company B and have been with them for 1 year and 4 months.

Company A just made me an offer to rejoin them as a contractor. Company B has asked if they can make a counter-offer.

B pays me about £35,000 as a permanent employee. A is offering me £250/day as a contractor with an initial 6 month contract. Which is nearly double of what I'm making.

My questions are:
1) will I get caught by the dreaded IR35?
2) is there a way of getting out of it?
3) if I do get caught by it and pay exorbitant taxes, roughly how much take-home pay can I expect to make, so I can give Company B a number for a pay raise?


thank you!