Becoming a contractor programmer in the UK
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Re: Becoming a contractor programmer in the UK
#2This looks incredibly helpful - I wish someone would do one for the US/Canada
Re: Becoming a contractor programmer in the UK
#3Good 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 sure your spouse is a director of the company as well (especially if they're not working). You can be hugely tax efficient in this manner and can extract nearly £80k per year from the company with no personal tax to pay (there will still be corporation tax to pay on profits).
Re: Becoming a contractor programmer in the UK
#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 turnover includes the VAT.
For example, let's say you did £100 worth of work for a client. You invoice them for £100 + 20% VAT = £120 in total. You must then pay 14.5% of £120 to HMRC (i.e. £17.40).
Re: Becoming a contractor programmer in the UK
#5> 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…
Oops, it's good I didn't trust myself and got Crunch to do that for me :) Thanks a lot, I'll update the guide when I get a chance.
Re: Becoming a contractor programmer in the UK
#6I'd also mention joining IPSE (http://www.ipse.co.uk/) which a is trade organisation for freelancers. They provide various benefits including IR35 insurance that covers investigations.
Freeagent is a good online accounts package as well, but you need to find an accountant that uses it.
Re: Becoming a contractor programmer in the UK
#7It'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).
Re: Becoming a contractor programmer in the UK
#8one thing I would say is that i have had good fortune with recruiters, providing they are a decent recruiter they can ensure 0 downtime between contracts and if financial stability is a concern then this should notbe overlooked. One thing i have found is that finding a good recruitr and sticking with them has ben more useful than calling a handful of agencies and using the shotgun approach.
I would note that none have ever told me the name of a client prior to me accepting to be represented by them and I have been introduced to a client company who then asked me to work directly through them and to bypass the recruiter (and any fees the client company would be paying to them). I refused as it was a single contract for 6 months and burning bridges with anyone isnt worth it for that sort of duration. Plus the recruiter had got me the interview within 7 days of me getting in touch with them.
YMMV just my 2cents.
Re: Becoming a contractor programmer in the UK
#9This looks incredibly helpful - I wish someone would do one for the US/Canada
+1 for canada
Re: Becoming a contractor programmer in the UK
#10In terms of the recruiters section, whilst I appreciate you may not have had a good experience, this is probably the way a lot of people get contracting work, at least until you have a fairly big network of contacts.
I'd be more interested in knowing what agencies do have a good reputation / good developer experience along with the note to beware of the cowboys.