Reply to: Can someone explain as new to all this.....

[XperTest]

The fact is with the information he's given us so far he would actually be taking a pay cut to go contracting! Exchanging the comfort of a 30K salary (plus oension, sick pay etc) for a 15 pounds/hour contract coupled with the uncertainty that goes with contracting seems a bit daft to me, even if it's a lifestyle decision..

[max]

I am thinking about going contracting in the next 12 months, I have had enough of the permanent game for a while and want the flexibilty of being able to have more time off inbetween contracts.

Do it now! The contracting market can die off. Good times now, but they may not last.

[max]

I'd love to have my own company and have the responsibility of my own company but considering my expected IR35 status and the fact that I hope to go permie within the year I think umbrellas are the only option. Rather that than have a company setup for 6-9 months and then bin it when you go permie and have little rewards as you are still going PAYE.

If someone can tell me who i can speak to that is creditable that will advise me exaclty under my current working practices how I can avoid IR35 without completely changing the way I work and risking losing my position then I am all EARS!!!

Don't bother , if you are going to go back to being a permanent employee within the year, the amount of work involved..bank accounts, vat etc etc, then closing it all down..

[malvolio]

Are you getting the message yet, Spiderman??

Even shift-working tape-changers have been found to be outside IR35. As long as you have one of no MOO, a reasonable RoS or (not AND, OR) a minimum of D&C, your IR35 status is defensible. So yes, there is no reason for a thinking contractor to be inside without very good reason.

However if you are using an umbrella, IR35 doesn't matter since you are taxed as an employee anyway, which is as it should be - you want out of FTE taxation, you need to have your own company. Simple, really.

[Ardesco]

Or that HMRC won't bother because they know that 99% of cases are going to be seen off.

[Old Greg]

And our survey says.....

DING!!!

Which is why people say that 99%+ of contractors are outside of IR35 - what is meant is that they (with PCG support) will be able to successfully see off the HMRC.

[Ardesco]

And I assume the reason they are prepared to ensure the penalties/fees is because almost no-one is ever caught...

And our survey says.....

DING!!!

[Old Greg]

Ask QDOS if they will insure you and pay out any fees/penalties if you are found to be inside IR35. Will cost more than you need to pay but will give complete peace of mind.

And I assume the reason they are prepared to ensure the penalties/fees is because almost no-one is ever caught...

[Ardesco]

Ask QDOS if they will insure you and pay out any fees/penalties if you are found to be inside IR35. Will cost more than you need to pay but will give complete peace of mind.

[Spiderman]

Its getting quite annoying when I keep seeing people say how 99.9% of contractors are outside IR35, I think that's a little inaccurate.

Despite my contract seemingly outside IR35 I have done many working practices tests and can confirm that many people have advised me I am inside IR35, that my end client has too much control over what I do, where I do it and how I do it (and believe me not much option as things stand). This would be the case for a lot of people in the IT world I'm sure. So people that go through umbrellas are not necessarily badly advised or scared of a little paperwork, they are often people who have been advised by more than one person they are at serious risk of being inside IR35, are not in contracting for the long term but using it as a stop gap or on a short term contract. Or like myself all three!

I'd love to have my own company and have the responsibility of my own company but considering my expected IR35 status and the fact that I hope to go permie within the year I think umbrellas are the only option. Rather that than have a company setup for 6-9 months and then bin it when you go permie and have little rewards as you are still going PAYE.

If someone can tell me who i can speak to that is creditable that will advise me exaclty under my current working practices how I can avoid IR35 without completely changing the way I work and risking losing my position then I am all EARS!!!

[Cooperinliverp00l]

Sounds to me like you're being overpaid as a permie if you're on 30K, yet your market rate as a contractor would only be 15/hr. My advice would be to stay put.

£15ph what do you do polish the real contractors shoes during lunch break.

Yeah go contracting for the life style of breaks between contractos the freedom to choice where you work but you have to take into account inorder to get that life style you have to charge top dollar so that when your on your break or even on the bench for 2 months you can still survive to a reasonable standard as when your rolling in it. That's why i do any contract for less than 4 times your rate.

[XperTest]

Sounds to me like you're being overpaid as a permie if you're on 30K, yet your market rate as a contractor would only be 15/hr. My advice would be to stay put.

[Old Greg]

Actualy, if you want to get really depressed, you should also factor in holidays, bank holidays, SSP, critical illness, pensions and training - I'm assuming on £30k you're not getting cars and healthcare... £30k salary is near enough £30 an hour just to stand still.

And never assume you'll be in IR35. 99.99% of contractors aren't, they just don't believe it.

Like someone said, go read the first timers guides on here and the PCG website. Understand the rules, then ask questions.

I absolutely believed I'd be in IR35. But, I've got a standard agency IR35 friendly contract (checked professionally), I make an effort to behave as if I'm outside of IR35, got PCG membership and looked at the statistics of HMRC vs PCG-backed contractors. So I'm on low salary, high dividends outside IR35. Makes a massive difference.

[malvolio]

Actualy, if you want to get really depressed, you should also factor in holidays, bank holidays, SSP, critical illness, pensions and training - I'm assuming on £30k you're not getting cars and healthcare... £30k salary is near enough £30 an hour just to stand still.

And never assume you'll be in IR35. 99.99% of contractors aren't, they just don't believe it.

Like someone said, go read the first timers guides on here and the PCG website. Understand the rules, then ask questions.

[Ardesco]

This is what I am confused about or I am being really silly and missing something as it says to me anyone using a PAYE umbrella will always earn less on the hourly rate they get than if they were earning roughly the same hourly rate (once you work it out through annual salary/hours worked etc) in a permanent position??

yes you are missing something that has been explained above.

When you are a permie the company that you are working for pays the employers NI contributions, your annual salery does not include the money paid to IR for NI by your employer.

When you are contracting you have to pay both employers and employees NI contributions so you have to take another 12.9% off the money that you are paid and pay that to the IR. You then also have to pay the umbrella company fees.

An hourly rate of £15/hour for a contractor is worth less than an hourly rate of £15/hour for a permie because we have a bigger tax burden (if taking all our money through PAYE or going through an umbrella company)