londoneye Posted September 12, 2007 Share Posted September 12, 2007 HiNot sure if anyone can help. I have just been asked if I want to be considered for consultancy positions in UK, but on the basis of being a self-employed consultant. I have already (sorry) asked some questions recently on here regarding taking short-term contract positions etc in UK, and thus paying direct through PAYE into UK tax/NI etc. However, I am not sure whether I am in essentially the same position if I am working as stated above? The compay is actually a firm of lawyers, so they would probably know answer, but I have never been self-employed before and don't want to make myself look too stupid.Does anyone know please ? Link to comment Share on other sites More sharing options...
Just Katie Posted September 12, 2007 Share Posted September 12, 2007 Hi Londoneye,I too am a self employed consultant. My fees get paid through a limited company of which myself and my husband are directors. Your first point of call will be to set up a limited company. I believe that there are certain tax advantages of directorship also, you can off set many of your outgoings ie percentage of your car value, home and petrol against your business as expenses.However, you must remember you get no holiday pay or sickness pay so you will need to have a PHI in place.Because there are no employment ties with this kind of work there is a good earnings potential and, you dont get caught up in office politics which is an added bonus. Link to comment Share on other sites More sharing options...
Albert the InfoGipsy Posted September 12, 2007 Share Posted September 12, 2007 I don't know what line you are in, but in my area (IT) it is generally impossible to get contracts as self employed. The usual thing is to work through your own Ltd company, which makes you an employee of that company. If you are not worried about maximising income by balancing salary and dividends (too big a topic to discuss here) you could also consider working through an umbrella or composite company. This gives the minimum admin, particularly if you may only be working a few months each year.You may want to look at the info for new contractors/consultants on http://www.pcg.org.uk Link to comment Share on other sites More sharing options...
Pierre ZFP Posted September 12, 2007 Share Posted September 12, 2007 Also be aware of the dreaded 'IR35'. A particulaly nasty bit of legislation which limits what a self employed person can do regarding the way you can get at the money you have earned. In short, if you have contract work for the same company for more than a couple of months or so, you are, for Tax purposes, treated like an employee of the company and must pay yourself under PAYE with only a small allowance for expences, and you can't paye dividends or bonuses. There's much more to it than that but you can end up paying nearly 60% of your receipts as tax/ni.. I had an IR35 Tax inspection and passed OKbut this was one of the main reasons that I stopped working in the UK and came to somewhere that I got a better deal Loads of good stuff on the PCG website and I would definitely recommend joining them. Link to comment Share on other sites More sharing options...
londoneye Posted September 12, 2007 Author Share Posted September 12, 2007 Why did I have a gut feeling this was going to be horribly complicated !I really only intend to work maximum of 4 months a year, so whilst I suppose I can expect to earn a reasonably good rate of pay (should this go through) then the overall sum is not going to be huge, simply because of the amount of time I would be working.As this is actually quite a good law firm, I assume if they are saying that I can be self-employed that they have sorted out something suitable which covers them. Haven't actually replied yet (I know them anyway from former life) so can ask plenty of questions when I do.Just been googling and there seem to be some companies who can almost act as an umbrella company for those who work as self-employed, taking a small percentage of earnings as a fee. Can't really work out how this works, but will keep plugging away.I want to take the easiest route, primarily because if I do this, it is unlikely to be for (as said above) more than 4 months a year and for a couple of years. Hope I am making sense. Link to comment Share on other sites More sharing options...
Just Katie Posted September 12, 2007 Share Posted September 12, 2007 LE, it really is not that complicated. You need to get yourself a good accountant who specialises in this area. My husband has bi annual meetings with ours to keep on top of everything. The umberella companies I have encountered have the an arm of the larger recruitment agencies. Link to comment Share on other sites More sharing options...
londoneye Posted September 12, 2007 Author Share Posted September 12, 2007 Ah, they have just emailed to say they will send me an agreement which would detail our contractual relationship - perhaps that might make more sense. As this is all new to me, I really do need to know whether the end result is going to be worth it, so any continuing input would be welcome.I am sure I will have at least a few weeks of 'dithering' time before I really have to make a decision. Link to comment Share on other sites More sharing options...
Pierre ZFP Posted September 12, 2007 Share Posted September 12, 2007 Given the short working duration it is highly unlikely you would fall under IR35 (IMO). Given that you would be working for a Law firm I would also assume they have an IR35 proof contract. Surely it would be best to ask what the best way to be paid is? You would not be thought foolish to ask this, quite the contrary, get it all clear at the begining.Please email me if you want to know good umbrella co. Link to comment Share on other sites More sharing options...
Russethouse Posted September 12, 2007 Share Posted September 12, 2007 Many law firms have good contacts with accountants, perhaps you could have a quick chat by phone or email......We are Ltd and have had to be careful of IR 35 but our accountant asked us a few key questions just in case our status was ever scrutinized.Katie, we only claim a small amount for expenses for having the office at home, (and this seems to go down, not up [:(] ) our accountant was worried about Capital Gains Tax in case we moved, if we claimed more (the equivalent of a rent for instance) Link to comment Share on other sites More sharing options...
Iceni Posted September 14, 2007 Share Posted September 14, 2007 JK - If you work for a ltd co you are not self employed, whether a shareholder or not. Tax benefits do not apply only to directors of close companies. It is more tax efficient to retain ownership of your car and be paid per mile for use on business (used to be 40p for the first 4000 in any tax year then 25p).IR35 is a particularly nasty piece of legislation which, if you have only 1 contract at a time and no other clients, is aimed at you.Tax avoidance is an art form and this forum or the saloon bar of The Dog & Duck are not necessarily the places to obtain the best advice. If you have to ask basic qusetions then you need to put yr hand in yr pocket for a professional. John, who was an accountant then an IT consultant before seeing the light and moving to Francenot Link to comment Share on other sites More sharing options...
londoneye Posted September 14, 2007 Author Share Posted September 14, 2007 JohnThat is good advice and I know it. I was trying to get me head around the whole concept, which is new to me, in order to make an 'in principal' decision as to whether it was worth progressing to the point of taking advice from an accountant. Sometimes it helps to get input initially because it clarifies the questions you need to ask, if nothing else. Thanks everyone. Link to comment Share on other sites More sharing options...
Just Katie Posted September 14, 2007 Share Posted September 14, 2007 Iceni, I take on board what you say which is exactly why I have advised the OP to do as I do and to take the advice of an accountant who specialises in this area giving me more time to specialise in my area of expertise and earn more money for the company. Link to comment Share on other sites More sharing options...
londoneye Posted September 14, 2007 Author Share Posted September 14, 2007 Sorry Just Katie - you did too.Will ponder a little more, and then if I am even half serious about it will find an accountant. Link to comment Share on other sites More sharing options...
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