Contracting
With tighter budgets and internal pressures across industries, many people are looking to move from being permanent employees to working as contractors or deciding for work for themselves rather than continuing to look for employment elsewhere.
We understand making a switch from a permanent form of employment to contracting can be a daunting task. But if you have made the decision to be your own boss, then let us congratulate you for finally taking the leap of faith!
Professionals such as doctors, nurses, engineers, IT contractors, lawyers and other workers in specialty trades find the option of working on a contractual basis more attractive due to benefits such as higher pay, better work/life balance, liberty to choose assignments, opportunity to wider work experience.
Contractors work options
The first step towards contracting is to consider the type of business you wish to opt for and its legal structure. This means there are various employment options – four to be precise – you can choose from to best suit your own individual requirements.
As a contractor you have several options around how you are paid and how you pay your tax. We can help you understand your working options and choose the most tax efficient way to operate.
Umbrella payroll
If you want to be free of all the administrative duties associated with contracting, then become an employee of an umbrella company. You get to choose the assignments you want to work on and you also don’t have to worry about falling inside IR35 legislation.
Limited company
Also known as a Personal Service Company (PSC), you are the director and shareholder of your own limited company. You have control of your company’s bank account. Your pay is a combination of salary and dividends which is decided by you. This means you have more control on your take-home salary.
PAYE
This is where you are paid directly by your agency through their payroll system. You are required to pay full tax and NI contributions on all your earnings to the agency. There are no statutory rights and you cannot claim any valid work-related expenses. PAYE is ideal for occasional contracts, but it is not the option to consider if you want to work for multiple agencies. In this model, you also fall outside of IR35 legislation.
Sole trading
Considered as the most personally liable working model, you have the option of running your business as an individual. Sole trading involves less paperwork and simpler accounts to manage. You have the right to retain all business profits. You also fall outside of IR35 legislation as a sole trader. However, you have to find all your assignments yourself – unlike in other contracting models.