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Becoming a contractor programmer in the UK

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Re: Becoming a contractor programmer in the UK

#101

Post by dav-id »

pjc50 wrote: post #28
jackgavigan wrote: post #4

> The fixed rate VAT does not let you reclaim VAT, but you pay a lower rate than you charge your clients. So if you're a developer contractor you'll be adding 20% VAT to your client invoices, but only pay 14.5% to HMRC, keeping the remaining 5.5% to the business. This is not correct. The way the flat rate VAT scheme works is you add VAT to your bill, then pay 14.5% of your "flat rate turnover" to HMRC. Flat rate turn…

It also doesn't mention that you don't need to register for VAT until you have a turnover of £82k.

Within the EU. For example if you have a turnover of £100k all from outside of the EU you don't need to register.

Re: Becoming a contractor programmer in the UK

#102

Post by LiquidFlux »

pjc50 wrote: post #25
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…

The privacy service is a genuine value-add if you don't like putting your home address on the Internet.

You can get service addresses that forward on HRMC mail for 20-30 quid a year.

Re: Becoming a contractor programmer in the UK

#103

Post by MatthewWilkes »

fractallyte wrote: post #95
monkeyprojects wrote: post #49

As a contractor of many years standing (I started contracting when the internet appeared in 1994) I started reading the article hoping it was correct and finished it with my fingers covering my eyes in fear. Sadly I don't have time to correct many of the misconceptions and total inaccuracies it contains. Its a shame really as good articles are hard to find and I'm sure many americans would find the differences betwee…

> agencies have been legally barred from employing people as self employed since the 1970s Do you happen to have a source for this? The reason I ask is that I've written to HMRC regarding this precise issue, since I haven't been able to find any official statement to that effect. While there are structural differences between a 'sole trader' (ie. self employed) and a 'limited company', it's up to the contractor to de…

I was a sole trader for many years and am now incorporated. Usually agencies won't touch sole traders as they'd be on the hook for disguised employment whereas if you have your own Ltd it's your problem if HMRC decides IR35 applies to you.

Sole traders won't be getting capital gains, so you won't personally be out anything, but the agency doesn't want to have to worry about having to have all their coders suddenly be able to claim on their employer's liability insurance or to be on the hook for NI.

Re: Becoming a contractor programmer in the UK

#104

Post by MatthewWilkes »

pjc50 wrote: post #28
jackgavigan wrote: post #4

> The fixed rate VAT does not let you reclaim VAT, but you pay a lower rate than you charge your clients. So if you're a developer contractor you'll be adding 20% VAT to your client invoices, but only pay 14.5% to HMRC, keeping the remaining 5.5% to the business. This is not correct. The way the flat rate VAT scheme works is you add VAT to your bill, then pay 14.5% of your "flat rate turnover" to HMRC. Flat rate turn…

It also doesn't mention that you don't need to register for VAT until you have a turnover of £82k.

But for coders it's almost always worth registering straight away and going for the FRS.

Also, on FRS you can claim a single £2k expense annually.

Re: Becoming a contractor programmer in the UK

#105

Post by lifeisstillgood »

monkeyprojects wrote: post #80
amouat wrote: post #74

Earlier quoted context omitted.

It would be a lot more useful if said what these misconceptions and inaccuracies were. It seemed generally accurate to me. I think you should either back up this comment or delete it; otherwise it's unfair to the author. (I don't mind to sound snarky here; the rest of your comment is genuinely helpful).

Where to begin Am I ready - The biggest bit is actually having the confidence to do it and a CV good that will get you past both the gatekeeper (the agent) and the client checking CVs... That means you should have real experience across both multiple employers and multiple market sectors (retail, consultancy, banking for instance) before thinking about it. Timing - Never understood this one. Projects have different l…

A few things to add to this.

- put aside money Before starting try, really try, to have saved at least 1 months expenses - preferably 2 and ideally six. You won't get paid (as in a months salary in the bank) for a couple of months. companies have cycles for payments and if you are on the wrong end it can hurt

- know your tax liabilities Sit down with your accountant and write a spreadsheet or a script that tells you exactly how much tax you owe to whom given say 10,000 of monthly income. Do not leave until this is done. Read this again. Trust me from bitter personal experience. Know your tax situation

- tax "dodges". You will be approached within days by someone hoping they can sell you on a scheme where you will pay 1% tax. Loans, off shore, forget all of them. Until you can afford your own tax lawyer, you pay what HMRC tells you. Possibly the only "dodge" is if your spouse works for you and you split the shares of the company, each takin dividend payments - this way as a couple you have about 80k of income before a top rate tax is applied instead of just 40k if you are the only dividend reciever.

- good personal project management. No matter what half arsed system the client has you must always know what tickets you have, what the acceptance criteria are, and be able to report weekly to whomever. Even if you report to your Collegue or your own inbox the discipline is vital.

- have a "swapsies" partner. IR35 essentially says companies cannot exploit workers by calling them contractors. So there are several tests, the most convincing is substitutability - the idea if I am sick my company can send in another contractor just as good. Have a comtractor friend act as this person - it is a useful way to remember you are supposed to be a company not a person.

Wow - there is a lot more to talk about

Re: Becoming a contractor programmer in the UK

#106

Post by tommyd »

kaolinite wrote: post #91

I recently started working as a contractor (just for a few months to bring some cash in so I can continue to work on my business). As I have a business already, I was considering doing the contracting under the business to reduce liability. Does anyone know whether this will increase the amount of tax I have to pay? I figured that I would have to pay corporation tax on any money I bring into the company as well as pe…

Ask your accountant. Seriously, that's the best thing to do in a situation like that - random strangers on the Internet have no idea of the ins and outs of your company structure etc. and so could potentially give bad advice, even if they don't intend to.

Re: Becoming a contractor programmer in the UK

#107

Post by framp »

Nursie wrote: post #56
framp wrote: post #52

Earlier quoted context omitted.

It's not a legal requirement and they're certainly not free AFAIK. It is a requirement for partecipating in certain contests (eg: Microsoft had a program for investing in indie games company and they required to use a business account entitled to the company) but I still haven't heard such requirement from a client.

>> It's not a legal requirement I'd be surprised if it wasn't a requirement with many clients though, it shows a level of professionalism. >> and they're certainly not free AFAIK. You haven't looked very hard then...

> I'd be surprised if it wasn't a requirement with many clients though, it shows a level of professionalism.

Agree, but I've never seen such clause in a contract.

> You haven't looked very hard then... I guess it's a service provided by only certain accountants? All the (chartered) accountants I've talked to never offered a free business account. They offered introduction to paid business account but that's the usual.

If it's not and there is a free business banking account with a reputable bank out somewhere I'll be happy to look into it.

Re: Becoming a contractor programmer in the UK

#108

Post by tommyd »

kybernetyk wrote: post #77
zimpenfish wrote: post #40

Earlier quoted context omitted.

It's a moral/ethical stance, I guess - tax funds social infrastructure and I think we need more of that. Good point about the shady "base pay + loan you never* have to repay" shenanigans - I suspect HMRC will be onto them soon enough though.

>It's a moral/ethical stance, I guess - tax funds social infrastructure and I think we need more of that. Then donate that "optimized" tax money to a charity where it does more good than being pumped in some governmental megaproject that burns most of its funding just on overhead.

> Then donate that "optimized" tax money to a charity where it does more good

Took the words out of my mouth, exactly my thinking

Re: Becoming a contractor programmer in the UK

#109

Post by [deleted] »

kybernetyk wrote: post #77
zimpenfish wrote: post #40

Earlier quoted context omitted.

It's a moral/ethical stance, I guess - tax funds social infrastructure and I think we need more of that. Good point about the shady "base pay + loan you never* have to repay" shenanigans - I suspect HMRC will be onto them soon enough though.

>It's a moral/ethical stance, I guess - tax funds social infrastructure and I think we need more of that. Then donate that "optimized" tax money to a charity where it does more good than being pumped in some governmental megaproject that burns most of its funding just on overhead.

[deleted]

Re: Becoming a contractor programmer in the UK

#110

Post by keeran »

stefek99 wrote: post #97

I would all the formalities after landing the first contract. It takes like 15 minutes online to establish limited company. And when you buy insurance - how do you know which one? My current contract requires me to have 10 million employer liability insurance (I don't hire anyone) but I have to have it anyway. I guess I'll add some comments in this thread... (if time allows)

Your consulting company employs you :)
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