Reply to: Just started contracting - how should I set myself up ??

[kyber]

I'm curious to know what the outcome was (hopefully not a drowning in a collapsed tent).

[stek]

With no accountant and no brolly, what about'

PAYE
VAT
Dividends
CT
RTI
P11D
P60
SA302

Not to mention treatment in the accounts for:

Fixed Assets
Depreciation
Written down allowances

Accounting is just adding up and taking away, right?

[Contreras]

...yes I think I even worked that one out (but I fully appreciate your clarification considering how inexperienced I am with this subject - ABC steps are what I need) - it's just the savings on the tax. Looks like this is going to be his permanent place to work though - so even saving tax on travelling isn't going to happen.

Also the Umbrella company want something like £27.50 per week out of your pocket. I know someone here said get an accountant - but due to the limited time I have left before he starts (10th August) - best I at least start off with a brolly to get the ball rolling then consider my other options later given some breathing space.

TBF, if your son can't find his way here to read/learn/ask for himself, for whatever reason, then it would be safe to say that Ltd Co is not for him.

'Get an accountant' can be the auto-response around here but in fact everything you have said points to Umbrella.

Cojak posted a bunch of links for you.

[cdgeorge]

Btw, you don't claim for "fuel" and it's important to realise that you're not actually getting 45p per mile, just saving the tax on what would otherwise have been paid as earned income.

...yes I think I even worked that one out (but I fully appreciate your clarification considering how inexperienced I am with this subject - ABC steps are what I need) - it's just the savings on the tax. Looks like this is going to be his permanent place to work though - so even saving tax on travelling isn't going to happen.

Also the Umbrella company want something like £27.50 per week out of your pocket. I know someone here said get an accountant - but due to the limited time I have left before he starts (10th August) - best I at least start off with a brolly to get the ball rolling then consider my other options later given some breathing space.

[Contreras]

Ah hang on - I replied thinking the fuel was expensible, but now, I'm not sure. This is a single contract organised by an agent (in a sense). The agent is a colleague of mine who's running his own successful ICT business and has found this work for him based on the customers and colleagues he has.

So does it change things when a contractor has an agent (my old work colleague finding work and recommending him) - and having the Umbrella company send the bills to the agent? Where do the tax breaks come with this arrangement? This is a single place of work in the sense that the contract will last approximately a year from the same place in the same location.

The tax break is because, say, you claim £100 for accommodation, plus 100 miles @ 45p, total £145 expenses tax free. If the same amount were paid as salary then at a guess you'd be left with ~£100 after deduction of tax and NICs.

Btw, you don't claim for "fuel" and it's important to realise that you're not actually getting 45p per mile, just saving the tax on what would otherwise have been paid as earned income.

However this only works if the workplace is temporary, which is the case for a series of contracts in different locations through the same Umbrella for example. A single contract would be deemed a permanent location and whilst you could still claim the expenses it would be taxed in effect the same as salary, i.e. no tax break.

Whether or not an agent is in the chain is irrelevant to the above.

Living out of a tent would be madness, also a false economy if it means you're not on form to do extra hours, etc.

[Scruff]

You haven't made a fool of yourself at all, but you have been misled by the Brolly

[cdgeorge]

This is just ridiculous. Cost of his tent? Seriously. No! It has duality of purpose as it isn't wholly and exclusively for the purpose of the business.

Most definitely go brolly. All this will be much easier and you've got someone to ask any further questions.

If this is even a serious thread, which I am seriously doubting, get him on airbnb or something. He starts coming in to work looking he's been camping he's gonna get walked.

Glad my dad applied a bit more common sense when he sent me out working.

Yes this is a serious thread - sorry - I've "never" had experience of this before in any way shape or form. However I just contacted an Umbrella company and quite literally they were very helpful in answering some key questions (including the stupid tent question).

In summary it's as simple as this:

Fuel - 45p per mile for first 10k tax free, 25p per mile after that (from our home or from the camp site).

£10 per day for being away from home for more than 10 hours - and £5 per day for food (tax free).

Photo receipts and simply upload them into their cloud (no need to amass paper receipts anymore).

Nothing more to it than that - should have simply asked the Brolly before making a fool of myself on here to Judge Dredd and the like.

[Scruff]

I think that your lad will need to grow a pair if he is going to be a ContractorScum, since it's a lot tougher than getting Daddy to do it all for him? Living in a tent Monday thru Thursday in the UK and maintaining a professional appearance do not go hand in hand. Better off renting a room in a house share or b'nb.

[northernladuk]

OK thanks - main outcome of this is that it is all expensible which is good news. So as you say, if he spent say £300 overall in fuel per Month traveling to and from 'our' home, and to and from the campsite in total - then £60 is claimable upon keeping the receipts and accommodation information (campsite address for example)?

I know this is silly but - the pitch fees (£10 per night = £40 per Week = roughly £160 per Month) is that also expensible? And the cost of his tent? Very sorry if this all seems silly - and yes, I am considering an accountant but might be simpler to begin with by registering with an Umbrella company (soon because he's starting 10th August!).

Thank you all for helping me thus far!

This is just ridiculous. Cost of his tent? Seriously. No! It has duality of purpose as it isn't wholly and exclusively for the purpose of the business.

Most definitely go brolly. All this will be much easier and you've got someone to ask any further questions.

If this is even a serious thread, which I am seriously doubting, get him on airbnb or something. He starts coming in to work looking he's been camping he's gonna get walked.

Glad my dad applied a bit more common sense when he sent me out working.

[cdgeorge]

What stek said ^^ except remember that if it's a single contract through the umbrella then the travel expenses are not claimable (tax free) because it would be deemed his permanent workplace.

Ah hang on - I replied thinking the fuel was expensible, but now, I'm not sure. This is a single contract organised by an agent (in a sense). The agent is a colleague of mine who's running his own successful ICT business and has found this work for him based on the customers and colleagues he has.

So does it change things when a contractor has an agent (my old work colleague finding work and recommending him) - and having the Umbrella company send the bills to the agent? Where do the tax breaks come with this arrangement? This is a single place of work in the sense that the contract will last approximately a year from the same place in the same location.

[cdgeorge]

Yes, all expensible. Note, however, it's only the tax you save, not the whole expense, so £100 a week expenses still means you (or you Ltd/brolly) pay £80, it's not free money.

Bet he lasts two weeks doing that....

OK thanks - main outcome of this is that it is all expensible which is good news. So as you say, if he spent say £300 overall in fuel per Month traveling to and from 'our' home, and to and from the campsite in total - then £60 is claimable upon keeping the receipts and accommodation information (campsite address for example)?

I know this is silly but - the pitch fees (£10 per night = £40 per Week = roughly £160 per Month) is that also expensible? And the cost of his tent? Very sorry if this all seems silly - and yes, I am considering an accountant but might be simpler to begin with by registering with an Umbrella company (soon because he's starting 10th August!).

Thank you all for helping me thus far!

[cojak]

Yes, all expensible. Note, however, it's only the tax you save, not the whole expense, so £100 a week expenses still means you (or you Ltd/brolly) pay £80, it's not free money.

Bet he lasts two weeks doing that....

I worked with a computer operator who did that, and it lasted 2 weeks as stek said.

Being presentable for a working environment isn't the same as festival living. Make sure that the campsite has laundry and ironing facilities. And be prepared to live in the car if the tent springs a leak...

[Contreras]

What stek said ^^ except remember that if it's a single contract through the umbrella then the travel expenses are not claimable (tax free) because it would be deemed his permanent workplace.

[northernladuk]

Set him. Up with a good accountant first. They will give all this information. Don't flail about blindly...

And just for the record I don't agree with your raking the money in comment for the reasons I mentioned earlier. He might be on what appears to be an amazing whack for his age now but he'll be on the same in 10 years time... Which he won't as contracting is slowly dying.

Each to his own though....

[stek]

OK he's looking to make the most of raking the money in while he can - but can you help me with the following.

Traveling expenses and the classification of 'home'. I know the letter of the law can be quite strict sometimes and therefore what does the taxman class as home? He is living in our house which is our home because he does not have a home of his own. Therefore when he travels from home (our home) to work - can he class our accommodation as 'home'?

The place where he is contracting from is 150 miles from our home (his home, however we want to label it) - so on Monday morning he will travel 150 miles down there and begin his working day. Monday night to Thursday night he will be 'camping' in a 'tent' to save on accommodation costs (hardcore I know). Then of course on Friday he will be traveling back to ours. This will be the routine to begin with.

So regarding travel expenses - to and from 'our home' which is his home too. And, travelling from the campsite (20 miles from the work place) - is this classed as his home while he is away? We want to take into account fuel costs/tax breaks to and from home/accommodation where possible.

Yes, all expensible. Note, however, it's only the tax you save, not the whole expense, so £100 a week expenses still means you (or you Ltd/brolly) pay £80, it's not free money.

Bet he lasts two weeks doing that....