Reply to: Contracting Newbie - Guidance needed!

[TheFaQQer]

Who works 28 days in a month??

I wondered how long it would take someone to spot that

20 days @ £350 = £7000 gross
Employer NI = £759
Employee NI = £390.79
PAYE = £1610.06
Umbrella fee = £95

Net income = £4144.79

Since the OP has disappeared since their first reply, I'm really not that fussed

[Sausage Surprise]

If you go umbrella, here's the figures from Contractor Umbrella for you:
28 days per month at £350 = £9800 income
Employers NI = 1098.54
Employees NI = 440.10
PAYE = 2707.34
Umbrella fee = 95.00

Total net income = £5463.65 a month

Who works 28 days in a month??

[rurffy]

There will only be a significant difference in earnings between Ltd and umbrella if the OP's working practices put them outside IR35. I would think it unlikely in mot circumstances that you would have a saving of £3.5k over 4 months even if the OP were outside IR35 as they would be likely to be a higher rate tax payer. Plus you haven't factored in set up and shut down costs on the Ltd Company. Realise it's just your opinion but it would be the OP who could be landed in the mire with HMR&C if they followed your advice and it was incorrect.

Ha! I just cant win , can i ?

[LisaContractorUmbrella]

To reply your questions -

For a rat of £350, monthly take home will be £5994.73 .(If you work rights days of the month).
Umbrella might be less.(Probably "Would" be less).

I don’t think opening a limited company is difficult. (All you need is pay an accountant few quids and they get it all up and running for you ).

People say Limited is only helpful for long term contracts – But well I would say 4 months at least – You could save up to £ 3.5k using Limited as oppose to Umbrella for that 4 months at that day rate (Nice cash right? - )


Totally my own opinion – I am sure a lot will disagree with me (But I know what im saying).

There will only be a significant difference in earnings between Ltd and umbrella if the OP's working practices put them outside IR35. I would think it unlikely in mot circumstances that you would have a saving of £3.5k over 4 months even if the OP were outside IR35 as they would be likely to be a higher rate tax payer. Plus you haven't factored in set up and shut down costs on the Ltd Company. Realise it's just your opinion but it would be the OP who could be landed in the mire with HMR&C if they followed your advice and it was incorrect.

[cojak]

Well, yes and no.

Like all moderated fora, this one likes you to 'share views' only that coincide with the moderators' - or some particularly inane yet favored posters' - views.

I think you'll find that moderators like you to 'share views' if you are experienced and your views have credibility.

3 month newbies who do not have accounting experience pontificating on take home pay do not count.

[pFennig]

We Share Our Views

This is a forum to share views right?

Well, yes and no.

Like all moderated fora, this one likes you to 'share views' only that coincide with the moderators' - or some particularly inane yet favored posters' - views.

[MyUserName]

This sounds like a strange setup. Take on a contractor and then move it to a perm position after a few months?

I would guess you would struggle to argue that you are outside IR35 in that case.

Being as you are likely to be inside IR35 most of the 'easy cash' that is rumoured to be in cotracting will not be available to you. Therefore you have little to lose by going through an umbrella and you will save hassle and a learning curve.

In doing this you are not properly becoming a contractor, just cashing in on some easy money. There is no need to smash a peanut with a sledgehammer, just go through an umbrella and it will be just like working for a different company for a few months.

[SueEllen]

If you can figure out the meaning of "my own opinion " you will understand its totally my own opinion and dont care if you dont understand.

This is a forum to share views right?

In this forum you need to make sure your views make sense as you are actually advising someone in a way that could screw up their life.

[rurffy]

Your rep begs to differ....



It's not that we disagree with you it's just that you use the following terms...

might be less, Probably "Would" be less, I don’t think, I would say, You could save

Could you make it any more woolly? Hardly the basis for a solid recommendation. The fact you miss out a whole raft of further information and fees makes the post next to worthless e.g a few quids for accountant? You mean £125 a month, £240 insurances PCG membership yada yada. Hope you don't mind me saying like.

If you can figure out the meaning of "my own opinion " you will understand its totally my own opinion and dont care if you dont understand.

This is a forum to share views right?

[TheFaQQer]

You could save up to £ 3.5k using Limited as oppose to Umbrella for that 4 months at that day rate (Nice cash right? - )

I doubt that figure.

If the OP wasn't going to be earning anything else in the year, then you might be close - the calculator on the Crunch website says that on an income of £29000 (just under the original 3 months at £350 a day), the take home would be £24168 a year, so saving £3386.

However, I suspect that the majority of that saving is based on being able to take most of the income as a dividend, which won't pan out if there is an additional PAYE income stream which pushes you into the higher tax bracket.

And as I said earlier, you then have the fees to close the company as well - if you have a retained profit of £25k then you need to look into MVL which isn't going to be cheap.

[northernladuk]

The few quid was to set up a company; running costs or costs of closure weren't even alluded to in the post.

Erm, I think they were...

You could save up to £ 3.5k using Limited as oppose to Umbrella for that 4 months at that day rate

He broke in to savings over the period which would include the running costs that he didn't bother with.

Umbrella certainly adds an extra layer of people who can run off with your money, but for a three month gig, that's the route I'd take.

This ^^. You are not a contractor just dibbing in for a quick piece of work and then jumping back out again. Do it the easy way and move on.

[TheFaQQer]

If you go umbrella, here's the figures from Contractor Umbrella for you:
28 days per month at £350 = £9800 income
Employers NI = 1098.54
Employees NI = 440.10
PAYE = 2707.34
Umbrella fee = 95.00

Total net income = £5463.65 a month

[TheFaQQer]

Could you make it any more woolly? Hardly the basis for a solid recommendation. The fact you miss out a whole raft of further information and fees makes the post next to worthless e.g a few quids for accountant? You mean £125 a month, £240 insurances PCG membership yada yada. Hope you don't mind me saying like.

The few quid was to set up a company; running costs or costs of closure weren't even alluded to in the post.

Work out the sums and see what you need to pay out for company formation, accounts, and company closure. Then work out the sums for going umbrella. If they are vastly different, then choose one over the other. If not, then choose whichever one you think is better.

Umbrella certainly adds an extra layer of people who can run off with your money, but for a three month gig, that's the route I'd take.

[northernladuk]

Totally my own opinion – I am sure a lot will disagree with me (But I know what im saying).

Your rep begs to differ....

rurffy is a confirmed cretin

It's not that we disagree with you it's just that you use the following terms...

might be less, Probably "Would" be less, I don’t think, I would say, You could save

Could you make it any more woolly? Hardly the basis for a solid recommendation. The fact you miss out a whole raft of further information and fees makes the post next to worthless e.g a few quids for accountant? You mean £125 a month, £240 insurances PCG membership yada yada. Hope you don't mind me saying like.

[rurffy]

To reply your questions -

For a rat of £350, monthly take home will be £5994.73 .(If you work rights days of the month).
Umbrella might be less.(Probably "Would" be less).

I don’t think opening a limited company is difficult. (All you need is pay an accountant few quids and they get it all up and running for you ).

People say Limited is only helpful for long term contracts – But well I would say 4 months at least – You could save up to £ 3.5k using Limited as oppose to Umbrella for that 4 months at that day rate (Nice cash right? - )


Totally my own opinion – I am sure a lot will disagree with me (But I know what im saying).