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Becoming a contractor programmer in the UK

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Re: Becoming a contractor programmer in the UK

#141

Post by medwezys »

ForHackernews wrote: post #129
stefek99 wrote: post #98

Earlier quoted context omitted.

I'm in the UK for 4.5 years and one of my biggest dreams is move to the US... Main advantage of being contractor? Much better pay... They say - "no job security" - but there is no such term anyway.

Is the dev scene bad in the UK? Why are you so interested in moving to the US?

The dev scene in the UK is not as great as it is in the US, but it's good. Perhaps the second best after the US.

US is appealing because it's an english speaking country, has a good dev scene and is an interesting country to live in.

Re: Becoming a contractor programmer in the UK

#142

Post by buserror »

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…

BTW there is a HUGE catch with that fixed rate system. It more or less prevents you from doing any work overseas (for a company that doesn't have a UK office). The reason is that the work you do oversea would have to be invoiced as /zero rate VAT/ -- however you will still be liable to pay back 13.5 (or 14.5 after a year) VAT from what you invoiced. This is cruel, but there is no way around it. The bottom line is that HRMC considers that you need to pay 13.5 for any VAT rate you charge, and 'zero rated' actually means you are 'charging' zero, but you are still technically charging! I can tell you it was a pretty massive headbanger for me earlier this year, and luckily the company I worked for had an obscure UK office that allowed me to re-invoice everything with the 'proper' 20% VAT

So if you plan to sell work to an oversea company in the future, make sure to get off the simplified VAT scheme beforehand. I know I will, come november, the shackles aren't really worth the tiny little money you get in the end.

Re: Becoming a contractor programmer in the UK

#143

Post by UK-AL »

monkeyprojects wrote: post #72
estefan wrote: post #64

Earlier quoted context omitted.

If you split up, your spouse will take half the money in your business account with them if it's 50-50...

They would happen anyway as part of any divorce settlement and may get more if you have children. Tax planning really should not be a reason to go contracting. You can get more money by moving to another permanent job elsewhere. Valid reasons to me for going contracting would be to remain technical, to continue learning new technologies, to avoid permie politics and appraisals (which is why I contract)..

You probably wont be able to find a permanent job that pays as well as contract job, at the same skill levels.

Re: Becoming a contractor programmer in the UK

#144

Post by tommyd »

d_t_w wrote: post #134
monkeyprojects wrote: post #73

Earlier quoted context omitted.

Oh the joys of IR35 and its old ability to attract people into tax avoidance schemes instead of setting up limited companies.... My advice and I've repeated it continually on Contractor UK for years is to only use a proper umbrella company or use a limited company. If someone says you'll receive more than 65-70% of you contract value from a umbrella company or more than 80% from a limited company they are just lying…

Good advice. I contracted for about 10 years in the UK, finance mostly. Had my own Ltd, took home about 65% of my day rate. No funny business, happened to move clients about every two years which helped for IR35. Nothing more complicated than that. Yes that means I paid 35% tax, which is pretty much the equivalent I would have paid if I could have ever found anyone who would pay me my day rate as a salary. 1. I belie…

> Had my own Ltd, took home about 65% of my day rate. No funny business

What do you define as "no funny business"? Just curious what you mean by that.

I operate a Ltd, take a low salary and the rest dividends (as recommended by my accountant), claim the odd lunch and transport as expenses and that is about it, which I think is fine (both legally and morally) as at the end of the day, I am operating as a company rather than an employee, and am following the letter of the law.

I actually don't think the difference in tax paid is that significant if you operate that way, I've not worked it out exactly but I suspect I pay around the same amount of tax as a contractor with an Ltd as I would in an equivalent permanent position (in the sense that the perm salary would be lower but the tax a bit higher), so I don't really feel bad about my contribution back in terms of taxation.

Of course, I've worked with people who do take the p*ss and will put anything and everything through as expenses and find all the tax loopholes they can - seems like a lot of effort and risk and not sure I'd feel morally great about it, but each to their own I guess!

Re: Becoming a contractor programmer in the UK

#145

Post by UK-AL »

dublinclontarf wrote: post #94
martinald wrote: post #82

Do not ever be a sole trader. It means you are personally liable for anything that goes wrong. Say you end up with a dreadful contract and everything goes wrong and the client sues. If you're a ltd company you can dissolve the business and pay them out of whatever assets your company has. If you're a sole trader you're liable for all the costs. Until you're personally bankrupt. Sure, there may be clauses in the contr…

This is what business indemnity insurance is for, get covered to a minimum of £50K. If you don't own a house and are brining in less than £70K PA it may or may not be worth registering a Limited company.

If you don't own a house, you probably have tons of cash which is even easier for people to get their hands on.

Re: Becoming a contractor programmer in the UK

#146

Post by buserror »

Nursie wrote: post #57
new299 wrote: post #53

Earlier quoted context omitted.

> Rate - Daily is good, hourly can also work. My current client will pre-authorise overpayment of a few hours a week if I work them. A little income boost if I want it. How do you manage your hours with a day rate? Is a work day 8 hours, or is it any day you worked for the company more than X hours? I've been trying to move to logging time and equating 1 day to 8 hours work. I find it fiddly to bill per day when perh…

Good to get this stuff sorted out ahead of time I guess. Last year I was on a no-questions, no deviating day-rate. The consultancy I was working through wanted hourly accounting, I told them no and charged my rate per day or part of a day I worked for them, and based my working practices around 7.5 hour days. I put in the odd extra hour or ten here and there because I liked them and enjoyed the project, and they neve…

I do largely prefer the hourly rate myself. The reason is that it is way too easy to work 'more' but it is very hard to work 'less' when paid daily. It was a problem I had for all the years I was employed, and I hate it..

With the hourly rate, I can just go off at lunchtime if I feel like the weather is good, and plonk in 12h on the following day if I like. And nobody /minds/ because they know I'm on an hourly rate. Also, I have a 'primary' client, so I can work there in the morning, and take on another contract from home and work that in the afternoon for example. I've been doing that a lot lately, and yes some days you end up doing silly hours, but they are all /paid/ hours.

I used to charge (as a freelance) on 'project' and 'phases' and so on, but very often, you always end up working more due to shifting specifications, bugs etc. By sticking to an hourly rate, you remove that constrain, and if you are 'expensive' companies will try not to waste your time -- while I see a lot of 'daylies' being given menial jobs because they are considered 'cheap' and expendables.

Re: Becoming a contractor programmer in the UK

#147

Post by buserror »

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…

Personally I prefer the 'human' accountant. I've been using an experienced accountant for many years, and continued on when I created the LTD. He also does my personal taxes, the PAYE etc. For the company, we 'share' a google spreadsheet that is very simple, I add my invoicing, expenses, and he uses that to do the VAT bits and PAYE. Very low overhead, and he's very cheap too -- he's also 1 mile away, so I go and sit down with him and chat about options etc if I feel like it.

There might be some pretty good small accountancy firms around that will cost a LOT less than these fancy online firms, so do check around locally, or asks for recommendations -- I think it's worth it.

Re: Becoming a contractor programmer in the UK

#148

Post by aaren »

d_t_w wrote: post #135
ForHackernews wrote: post #71

I've heard that in the UK, it's much more advantageous to work as a contractor than a full-time employee. Is there any truth to that? What advice would HN offer to a US-based developer looking to move to the UK?

London is a world of her own, my advice relates to her. The only thing you need to be an IT Contractor in London (other than some skills) is confidence. I worked a number of contracts over ten years in the finance sector in London. I never had a client pull a contract on me, I always left on my terms. On average I lasted two years until I moved on. Major Retail, Funds management, Investment banking was my progression…

Can you be more specific about the useful skills? Like a list, out of which you need 2 or 3. Would be good to know what specifically companies want you to be confident about :)

Re: Becoming a contractor programmer in the UK

#149

Post by Peroni »

randomname2 wrote: post #116
Peroni wrote: post #62

Earlier quoted context omitted.

Almost every salary ceiling is low compared to SV but it's all relative. It's not particularly difficult to achieve a £100k+ salary in London and you can have a very comfortable lifestyle on a six figure income.

Just out of interest, how? For a developer, £100k+ as a contractor is not particularly difficult, but as an employee this would be rare, no?

Anything relatively senior in FinTech encroaches on the six figure salary mark.

Plus there are plenty of experienced Data Scientists getting six figure offers lately. In the past twelve months the market has shifted quite quickly. £60-£70k is becoming the norm for a decent, experienced engineer. Add 'lead' to that title and you'll struggle to find great people for less than £100k.

Considering that £300-£400 per day is a pretty standard contracting rate, companies are ramping up salaries in order to tempt contractors back into salaried roles.

Re: Becoming a contractor programmer in the UK

#150

Post by buserror »

randomname2 wrote: post #116
Peroni wrote: post #62

Earlier quoted context omitted.

Almost every salary ceiling is low compared to SV but it's all relative. It's not particularly difficult to achieve a £100k+ salary in London and you can have a very comfortable lifestyle on a six figure income.

Just out of interest, how? For a developer, £100k+ as a contractor is not particularly difficult, but as an employee this would be rare, no?

I agree; unless working for google or something, the ceiling for a super-duper dev at hiring time seems to be around 65k -- perhaps a bit more if you stay and negotiate well, but I topped up at 75k before I became a contractor.

Now, this company tax year, I invoiced 120k ex-vat so far, managed to buy a rather large amount of kit on the company (like, that 4k£ dream workstation..) and I finally have the feeling I'm getting paid what I'm worth, without having to do any politics.

I can concentrate on pure engineering, and I don't have to ponder whether I should become some sort of 'manager' to crack up the engineer pay ceiling.

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