Where do I begin?

[Kentractor]

Sorry if this is the umpteenth time this sort of thing has been posted, but I hope I can glean some useful pointers from you...

As a died-in-the-wool "permie", for 30 years or so, I was made redundant a few weeks ago, and have been looking for a new position. Having worked with a number of contractors, and seen some of the vacant posts, it seems maybe I should take the plunge and give it a go. But where do I start? I am (or at least WAS) an IS Project Manager, with over 8 years PM experience, mainly on small-ish third-party packaged implementations, and with PRINCE2, MSP practitioner certificates.

Being new at this, and not so good on tax affairs, IR35 etc, I would probably start with an umbrella company, but how to choose which one? There is a lot of conflicting advice on the Internet, although this site seems to be pretty well balanced, I'm not so sure of others. What rate should I expect to earn (my salaried equivalent was £40K) - How much should I be looking to pay for umbrella services? Can I claim travelling expenses against tax? What else is claimable? How should I revise my CV to be attractive as a first-time contractor?

I would be grateful for any comments based on your own real-life experience, rather than the gloss I get from the umbrella and comparison websites.

Many thanks in anticipation,

Ken

[mudskipper]

Hey Ken

Start with the first timers guides --->

A rate oft quoted is permie salary/1000 = hourly rate. As a first timer, you may want to compromise a bit, but it's not a bad starting point.

Umbrella is a good choice if you're contracting short term, but you will take home considerably less if you believe yourself to be outside IR35 ( ----> ) than if you go Ltd.

There's an umbrella subforum Umbrella Companies - choose for youself which umbrellas seem most helpful.

[socialworker]

I went with Contractor Umbrella last year and they were excellent. All umbrellas should pay the same as the tax rules are the same for everyone. They have a calculator on their site , the main thing is you can claim is travel to a temporary workplace but watch out for the 2 year rule. Keep petrol receipts, they will ask for them. You can also claim overnight accommodation. Good luck

[LisaContractorUmbrella]

Hi Ken,

welcome to the forum

If you had a salary of £40,000 per year you will need to work out what you will need to earn to achieve the same or higher take home:

As a contractor you will only get paid for those weeks you actually work whereas as a permie you get paid for 52 weeks per year regardless - opinions vary but I would have thought that 46 working weeks per year would be about right.

If you are going to work with an umbrella company (or if you work through a Ltd but are inside IR35) your salary will be the contract rate (as agreed in the B2B contract between the brolly and the agency) less the amount that the umbrella company is obliged to pay for employer's national insurance, which is 13.8%, less the umbrella company's margin. You will be paid through PAYE so your salary will be subject to income tax and employee's national insurance contributions.

If it is your intention to work on more than one assignment whilst in the employment of the umbrella company you will be able to claim travel and subsistence expenses provided that the umbrella company is operating an over-arching contract of employment. With regard to other expenses - you can claim tax relief on costs which are incurred wholly and exclusively as a result of the contract - it's a complicated subject with many hundreds of pages of guidance from HMRC but a good umbrella company should have expert advisers who will be able to answer any questions that you have.

As Socialworker says - the take home you receive from any umbrella company should be no different from any other - the only differences will be in the margin that the umbrella company retains (usually £25-£30 per week) and the service that you receive.

HTH