Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Becoming a contractor programmer in the UK

github.com

Post reply on HN
Print view View original

11–20 of 174 posts

Re: Becoming a contractor programmer in the UK

#11

Post by new299 »

boothead wrote: post #3

Good advice, especially the bit about crunch. First time I contracted I let my accountant talk me into using their horrible spreadsheet. I couldn't make my self use it it was that bad and my accounts were a mess. Now my accountant (nimble jack) bundles freeagent (which when I looked into it was better than crunch and has an API) and keeping on top of things is much easier. One additional thing: If you're married make…

Yep, having set consulting companies a couple of times now having something like Freeagent is invaluable. Getting a good accountant is important as well, after switching once I now use 3wisebears who I'd recommend.

Re: Becoming a contractor programmer in the UK

#12

Post by zimpenfish »

My advice would be to use an umbrella company and let them deal with all the tax hassles - they have an entire staff purely for this. You will take home slightly less (no opportunity for tax "optimisation" but I disagree with that on principle anyway) but then also have no exposure to HMRC coming after you 6 years later saying "Where's our £10,000?" (has happened to several people I know.)

(edit for spelling)

Re: Becoming a contractor programmer in the UK

#13

Post by Nursie »

Why bother with a third party company registration service? You can do it yourself pretty easily through companies house.

Do companiesmadesimple have any value-add?

While I do share your cynicism about recruiters, I have also got most of my contracts through them. There are bad recruiters (vague job descriptions, never call you back) and there are good ones (We need someone here, you fit the bill, can we arrange a time to talk to my client?).

Learning to swallow your distaste and listen to them as if they were worthwhile human beings is a useful skill. Some (few) of them actually are.

(--edit-- good guide in general! I don't just want to harp on the negatives!)

Re: Becoming a contractor programmer in the UK

#14

Post by tonyedgecombe »

new299 wrote: post #7

It's probably worth noting that you only need to register for VAT if you're expecting to make > 82KGBP in VATable sales per year. If you're contracting is mostly remote and outside the UK, you don't need to register, or charge VAT (as I understand it).

On the other hand if you do register then you can claim back the VAT on any expenses.

Re: Becoming a contractor programmer in the UK

#15

Post by Nursie »

new299 wrote: post #7

It's probably worth noting that you only need to register for VAT if you're expecting to make > 82KGBP in VATable sales per year. If you're contracting is mostly remote and outside the UK, you don't need to register, or charge VAT (as I understand it).

There is a financial incentive to do so, you charge VAT at 20% and you pay it at 14.5%.

I.E. I do £100 of work, I charge £120 and pay the government 0.145 * 120 = £17.4

Further, for the first year, you get to pay at 13.5%, £16.20 in the example, effectively boosting company revenue by 3.8% for the first year, and 2.6% thereafter.

Re: Becoming a contractor programmer in the UK

#16

Post by markross »

new299 wrote: post #7

It's probably worth noting that you only need to register for VAT if you're expecting to make > 82KGBP in VATable sales per year. If you're contracting is mostly remote and outside the UK, you don't need to register, or charge VAT (as I understand it).

If you register for flat rate VAT you will (most likely) actually take home slightly more money however, so it's worth doing.

Re: Becoming a contractor programmer in the UK

#17

Post by Nursie »

tonyedgecombe wrote: post #14
new299 wrote: post #7

It's probably worth noting that you only need to register for VAT if you're expecting to make > 82KGBP in VATable sales per year. If you're contracting is mostly remote and outside the UK, you don't need to register, or charge VAT (as I understand it).

On the other hand if you do register then you can claim back the VAT on any expenses.

Not quite that simple, unfortunately. You can only claim it back on large expenditures if you're on the fixed-rate scheme (I think that's what it's called). Computer equipment is the prime one, but it has to be over £2K in a single spend.

AFAICT most VAT on everyday expenses doesn't come back to you.

OTOH you can charge the company for your lunch every day, which means you get that paid for before corporation tax, income tax or anything else...

Re: Becoming a contractor programmer in the UK

#18

Post by peter303 »

kifler wrote: post #2

This looks incredibly helpful - I wish someone would do one for the US/Canada

Theres a lot out there on starting your own business in the USA. The US tax gotcha that is similar to VAT is quarterly payroll and income tax on your NET income. People get several $10Ks behind on taxes, especially the doubled social security part, and could be penalized by the IRS.

Re: Becoming a contractor programmer in the UK

#19

Post by tommyd »

boothead wrote: post #3

Good advice, especially the bit about crunch. First time I contracted I let my accountant talk me into using their horrible spreadsheet. I couldn't make my self use it it was that bad and my accounts were a mess. Now my accountant (nimble jack) bundles freeagent (which when I looked into it was better than crunch and has an API) and keeping on top of things is much easier. One additional thing: If you're married make…

Other recommendations of accountants with decent online systems would be greatly appreciated. My current ones (Nixon Williams) seem fairly good as accountants, but the spreadsheet based expenses (and having to use email to take dividends, check profit/loss, etc) are getting quite annoying, and they want to charge extra to use their registered address rather than my own, which leaves a bit of a bad taste when Crunch include this.

I have heard good things about Crunch's system but some mixed things about the quality of their advice and how pro-active they are - any other feedback on them or others?

The point about the registered address and fraud is a real one, someone I worked with had this happen to them - will Crunch act as the service address as well as the registered address?

Re: Becoming a contractor programmer in the UK

#20

Post by wumbernang »

Nursie wrote: post #13

Why bother with a third party company registration service? You can do it yourself pretty easily through companies house. Do companiesmadesimple have any value-add? While I do share your cynicism about recruiters, I have also got most of my contracts through them. There are bad recruiters (vague job descriptions, never call you back) and there are good ones (We need someone here, you fit the bill, can we arrange a ti…

They do all the annoying paperwork for you at the registration service like the initial transfer of directors capital and appointments and crap like that. It's worth it.

(I've killed 5 limited companies now so I have lots of experience ;-)

IR35 is the only PITA IMHO of doing all this and that's easily sorted by doing the odd phone/laptop repair at the same time and invoicing it.

Post reply on HN