Moving from Perm Employment to Contracting

IronHorse100

I'm considering a move to contracting (IT) from my perm job. Bit nervous as I'm a first timer. Anyone still using an Umbrella company over a Limited Company? Are there any advantages to the former anymore (aside from the obvious of doing your paperwork and lessening the risk of you nobbing up your tax return)?

Anyone advise what the IR35 rules are in a nutshell?

Cheers

daviesee

The Gov were targetting umbrella companies so that may not be the best idea.
Seek the advice of a good accountant. Costs more than DIY but keeps you on the right track.
Make sure you keep money aside for paying taxes.
Put money aside for rainy day scenario.
Set up a company pension (tax friendly and no-one else is going to look after your retirement).
Don't get blinded by the glowing rates on offer. Try to live on the same wage (or close) as perm. That way you accumulate savings for rainy days and if you go back to perm, it's not such a transition.

Get a company bike & gear! :P

Stewie Griffin

I wouldnt bank on IR35 being around for too much longer, or not in its current form. The Government have promised to review it;
"Review IR35 as part of a wholesale review of all small business taxation, and seek to replace it with simpler measures that prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self employed, or restrict labour market flexibility."

mrchrispy

I'll be doing that myself soon when the police decide to can us all :-(
going to wait until pushed though...no point jumping just yet.

father_jack

The question is why? Contract work is pretty unreliable.

daviesee

Father Jack wrote:

The question is why? Contract work is pretty unreliable.

You have to be confident in 2 areas.

1. The market is looking for contractors.

2. Confident in your own abilities.

I have been working for 31 years :shock: , 17 years of which have been contracting.

Contracted at 10 companies, laid off once in the 90's recession. I left the other 9 times for a better job.
"Permanent" at 5 companies, made redundant 5 times.

I see no point in going "permanent".

Edit:-

3. You have to be confident you will not suffer any long term illness or accidents, or have the money saved up to cover.