Thanks for the quick responses!!!
The moonlighting will be a issue I feel. I just went to reach for my contract and couldn’t find it Will request a copy in the morning and see what it says. No doubt it will say I cant.
I know the owner on a personal level so arranging a one of payment at the end on the contract after leaving my current company isn’t a issue/risk so I think I will do that. Should mean my company never finds out.
The IR35 stuff does worry me. Last thing I want is the inland revenue knocking on my door and bankrupting me How hard is it to stay outside of it ? I saw that you can get insurance which would payout if you fell foul of it. Are they to be trusted ?
To be outside of IR35 do you have to be able to provide someone else if you fall ill? Because clearly most us cant I would presume ? Or is it more complicated ?
Cheers again....oh and thanks for the spelling lesson :P
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Reply to: New contractor needing help
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Previously on "New contractor needing help"
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Most professional jobs will require you to get permission to do other work. I don't know if it's enforceable by law but it's not god to find out the hard way, plus of course there are ethical aspects too. Apart from anything else, working extra time is likely to affect your work during the day if you are missing out on sleep.
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There's a danger that if the work you're doing is similar to that of your employer, they could claim ownership of it, or at least ownership of the money you've made. Unlikely, but I'd suggest it's better if they never know, unless you're 100% confident of getting their full approval in which case get it in writing.
I agree with Crossroads' suggestion: create a limited company. You don't need to do any of the PAYE stuff as you're still on PAYE from your employer, so you can just pay a dividend as and when you feel like a bonus, or just let the money accumulate in the company bank account until you're ready to contract full time.
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Originally posted by oafc0000 View PostIf this is successful I will be handing my notice in at my main job and then starting work for this company on a 6 month contract while I sort there IT department out.
Originally posted by oafc0000 View PostI don’t really want my current company finding out what im up to if it can be helped (for obvious reasons).
Originally posted by oafc0000 View Post(allot of them seem to claim this).
HTH
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I've had my fingers burnt moonlighting in a permie job. If you can get your current employer to agree it will make life a lot easier.
No clandestine phone calls, random days off etc. It will also make it less of a hassle to do a good job at your new client.
Back to your questions:
Having "permanent" employment and contracting side by side need not be complicated from a tax perspective. The challenge however is to structure things in a tax efficient manner. An umbrella company is definitely not going to help here.
I'm guessing you know the client fairly well given the nature of the engagement, so you will be able to ensure that your contract and your working practices fall outside of IR35. This is assuming (and you need to make this clear) that your new client see you as a supplier, not as an employee.
I would recommend your own Ltd Company is the way forward, and whilst you are still in permanent employment, simply draw little or no salary / dividends from your contracting income.
Once you are contracting full time, you will have funds in the company that you should be able to extract on a more tax efficient basis.
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First piece of advice; don't double post
The only 'complication' I can see with your situation is that you will be taxed the full 40% on your salary (thru the umbrella) since it would be treated in tax code terms as a second job. You certainly don't want your current employer finding out, it is probably in your employment contract that moonlighting is not permitted... and especially if this other company you will be doing part time work for could be seen as a competitor.
In answer to your second question, yes, by using an umbrella you avoid IR35issues, because you take all income as PAYE (most tax inefficient way for contractors).
E.G. Say the client is paying £1000 a week for this part time work, you will pay (assuming 0 expenses) approx £100 in Employers NI, £100 in Employees NI, £360 in PAYE tax, £20 umbrella fees, and therefore take home £420.Last edited by MrRobin; 10 February 2008, 22:34.
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Originally posted by oafc0000 View PostSo my first problem/issue is if there is any complications with contracting and being in "full time" employment. I don’t really want my current company finding out what im up to if it can be helped (for obvious reasons).
My second concern is IR35 which sounds like a nightmare. Am I right in thinking if I use a umbrella company I can pretty much avoid any IR35 issues (allot of them seem to claim this).
Finally, can anyone recommend a good trusted umbrella company I can go with.
2 - IR35 only impacts contractors. If you go through an umbrella company, then you are an employee, so you don't have to worry about IR35. You will pay more tax, though, compared with running your own limited company. You are better off running your own limited company even if you are caught by IR35, which may be unlikely.
3 - ContractorUmbrella seem to get good reviews. But I've never used an umbrella company so that's no recommendation. Bear in mind that those that suggest things like "you can claim £25 a day without a receipt because we have a dispensation" are encouraging tax fraud - unless you incur the expense, you can't claim it. No umbrella company can get a better return for you, the only difference is on their fees and level of service.
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New contractor needing help
Hi All
I’m just about to start contracting and I am confused about the best way to go about it.
The situation is as follows. I am going to start working on a project at nights and weekends for a company. If this is successful I will be handing my notice in at my main job and then starting work for this company on a 6 month contract while I sort there IT department out. After this I will begin working as a contractor full time.
So my first problem/issue is if there is any complications with contracting and being in "full time" employment. I don’t really want my current company finding out what im up to if it can be helped (for obvious reasons).
My second concern is IR35 which sounds like a nightmare. Am I right in thinking if I use a umbrella company I can pretty much avoid any IR35 issues (allot of them seem to claim this).
Finally, can anyone recommend a good trusted umbrella company I can go with.
Thanks everyone!Tags: None
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