Considering becoming an IT contractor

[man]

Contracting rates will be 'better' in London because overheads are much higher. In my area of work, rates aren't noticeably different on average once I deduct those additional overheads (although I have noticed a greater upper and lower range of rates). I try hard to avoid anything based in London myself, but I haven't been contracting long and I can afford some bench time so YMMV.

Everything I've read over the past few years suggests that contracting doesn't in real terms pay what it used to (with, as always, some notable exceptions depending on your speciality).

IR35 is confusing at first but important - in short your gigs are either 'inside' or 'outside' IR35. If 'inside' you are likely to be better off in an umbrella arrangement and will be taxed similarly to if you were an employee. If 'outside' then you are likely to be better off operating as a limited company and in real terms you are likely to be paying a lower rate of tax as you are in a proper business to business relationship with the risks that entails. However, it is vital that you ensure that whatever contract you sign (and subsequently, how you act when dealing with the client day to day), is appropriate for the IR35 status (which is especially important when the contract is 'outside' IR35 as that's what HMRC is appearing to make efforts to complicate for contractors). There are expert IR35 contract assessment services available to ensure that the contracts you sign are appropriate and properly written, and IR35 insurance available to help you with any future audit HMRC may decide to perform on your business - which your accountant (see previous posters - and remember that the choice of accountant is important) may also be able to provide some level of help with. Naturally, these services involve shelling out some money but winging it isn't advisable and may cost you a lot of money in the long run.

[jamesbrown]

I'm not quite sure if it's worth it

We can't really answer that question for you, because it depends on so many circumstantial factors.

However, FWIW, you couldn't really have chosen a worse time in terms of regulatory upheaval (specifically, changes to the administration of IR35 that are highly likely in the next 1-2 years).

[LondonManc]

I'm not quite sure if it's worth it, but I imagine I'd need to go to London in order to do so, given the relative easiness it is to get a job there?

I was reading a thread on this, but it was from 2017. Not sure if it still applied. The contracting rates certainly appear to be better. I'm not quite sure what "IR35" is. I've had a quick Google on it, but still somewhat confused.

Do I need to use an umbrella company, or an agency who would take up a chunk of my wages any way?

Thanks in advance.

1. Generally it's a bit of a lottery whether it's worth it or not; individual circumstances vary. London has more contracts but more competition - people from the north can afford to contract in London but not so the other way round on the whole.

2. Rates are all over the show, depending upon role. The current IR35 rules and their implementation in the public sector has had an impact on the market. As NLUK said, plenty of reading up on IR35 itself as well as the latest Public Sector fun from last year.

3. No you don't and agencies don't take a chunk of your wages. You need to sort the terminology out too - as a limited company your wages are by no means equal to your invoicing for a variety of reasons. Whatever you do, if you go contracting as a limited company, engage an accountant.

[northernladuk]

Welcome...

Start by reading the first time guides in the links on the right and side and have a look at the IPSE pages for newbie guides. You need to do a lot more research in to what being a contractor is before you can even consider whether it's for you or not. There are also plenty of links about IR35 which is pretty key so need to get your head around that.

I'm sure there are plenty of contractors on the bench that would argue about the 'easiness' of getting a gig in London. How easy it is depends on your skill levels and past history. You are selling your skills to clients and are competing against 1000's of highly skilled and experience contractors.

A bit more research required and then come back with some more specific questions that you have and we will see if we can help.

[an0nymous]

I'm not quite sure if it's worth it, but I imagine I'd need to go to London in order to do so, given the relative easiness it is to get a job there?

I was reading a thread on this, but it was from 2017. Not sure if it still applied. The contracting rates certainly appear to be better. I'm not quite sure what "IR35" is. I've had a quick Google on it, but still somewhat confused.

Do I need to use an umbrella company, or an agency who would take up a chunk of my wages any way?

Thanks in advance.