Contracting in the UK
A guide for those 'outside' the UK considering contracting 'inside' the UK
If you are already in the UK, you may find the following pages, guides and case studies useful:
Take home pay through a limited or umbrella company – The differences
First time Contracting or Freelancing? - A summary of the alternatives along with pros and cons
Take home pay calculator - How much could you be taking home
Step-by-step Guide to Contracting - Download a FREE copy of our guide
Limited or Umbrella? Can't decide? - We help you decide which is best
Take home pay case studies - Examples of contractors using a ltd co. & umbrella co.
Umbrella company guide - Everything you ever wanted to know about umbrella company services
IR35 Guide - A great plain English guide to IR35
Whether you are thinking of working in the UK under a HSMP (Highly Skilled Migrant Programme) or are allowed to work in the UK under other such Government approved schemes, it is perfectly acceptable for you to work through your own limited company or work through an umbrella company.
In order to work in the UK you may need a work permit or a visa; you will also need a National Insurance Number which is a personal number that is used to record an individual's NI contributions and credited contributions. You will also need a personal bank account and if you are planning to work through your own limited company a company/business bank account.
There are a few FREE downloadable guides that you may find helpful:
Step-by-step guide to Contracting through your own limited company
Comprehensive Guide to Contracting (78 pages!)
Guide to claiming expenses in the UK as a contractor
Plain English Guide to IR35 - This guide will make more sense when you arrive in the UK, but is truly excellent background reading.
Lets first consider your options
1. Operate through your own limited company.
or
2. Work through an umbrella company.
We've summarised the alternatives along with the pros and cons of each method on these pages:
You may also find the following pages, guides and case studies helpful:
Take home pay calculator - How much could you be taking home?
Take home pay case studies - Examples of contractors using a ltd co. & umbrella co.
Contracting through your own limited company
It is often said that contracting through your own limited company is a daunting task. In fact, nothing could be further from the truth.
Administering your own limited company with the support a dedicated firm of accountants like SJD Accountancy, is simple, efficient and inexpensive.
Contracting through your own limited company does require a little more work than using an umbrella company; you'll need to form a company which will just take five minutes - you can form your company and check name availability here.
Benefits of Contracting through your own limited company:
- The most tax efficient way of working.
- Claim a wide range of expenses - accountancy fees, equipment, software etc.
- Access to the Flat Rate VAT scheme (saving around £2,000-£3,000 a year on a typical contract value)
- Even if inside IR35 it may still be worth it.
- You keep complete control of your financial affairs meaning you do not have to risk your money with any third party administrator.
- Running your own business isn't difficult; submit spreadsheets to your SJD accountant - just like Umbrella time sheets and expenses.
Downsides
- There is a certain amount of paperwork involved, usually about 10 - 15 minutes per month.
Working through an umbrella company
This is where you 'the contractor' essentially become an employee of the umbrella company.
You submit time-sheets to the umbrella who will in turn, invoice the end client (or agency) for the work done by you. You will then be paid as a PAYE employee less the umbrella fee.
Benefits of using an Umbrella Company
- Very easy to use, you simply enter your timesheet and expense details and wait to be paid.
- All tax and NI is deducted before you receive your money, so you will have no further taxes to pay.
- Ideal if your contract is less than three months.
Downsides
- You will receive a salary that is subject to full PAYE Tax and NI, it's just like being a permanent member of staff again.
- You are reliant on the umbrella company to collect your money from the client or agent and then to pay it on to you.
Accountancy Services for Contractors
At SJD we have put together a complete package which will take care of all your company's needs, this includes:
- Year-end accounts
- Corporation tax
- Payroll bureau
- Dividend administration
- Dealing with Inland Revenue and Companies House
- Completion of VAT returns
- Completion of Annual Return
- Personal Taxation
- Unlimited direct access to your accountant for all help and advice
- Free bookkeeping software
All for a fixed monthly fee of only £110 plus VAT which is one of the lowest prices in the market.
Our On-line Company formation service offers same-day formations and includes opening a Company Bank Account, VAT/PAYE registration and advice on share structure.
SJD Accountancy is the UK's largest specialist provider of fixed fee, limited company accountancy services to contractors and freelancers.
We are the only national specialist firm of accountants with offices in all major cities, deemed PCG Accredited Accountants and are the chosen accountancy firm for more than 11,000 clients.
We are the only accountants who offer published service commitments with the back up of a money back guarantee. click here to see our guarantee.
SJD Accountancy has been acting for contractors and small businesses since 1992 and is the most recommended accountancy firm on the Internet. We have more qualified staff than any other specialist firm, with qualifications covering the following major Tax and Accountancy bodies, including ATII, ATT, ACCA, CA, ACA, FCCA, ACMA.
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On top of all of this, SJD have also won every relevant industry award possible, including:
- Best Contractor Accountants - Contractor UK 2011 - 2007
- Accountant of the Year - The British Accountancy Awards 2011
- Best Professional Team of the Year - UK Customer Experience Award 2011
- Customer Commitment Award - Institute of Customer Service 2011
- National Chamber of Commerce Award 2010
- Medium firm of the Year - Finalist Accountancy Age 2010
- Excellence in Customer Service - Finalists National Customer Service Awards 2009
- Sunday Times Best Small Companies - Award 2009 - 2007
- Small firm of the Year - Accountancy Age 2007 & 2004 and finalists in 2010 and all years since 2003
- Deemed PCG accredited accountants and fully MSC compliant
Click here to see why clients choose SJD Accountancy, also read testimonials on what our clients have to say about us.
If you wish to appoint us as your accountants immediately, the quickest and easiest way to do so is by accessing our Client Agreement Form.
If you have any question about contracting or would like any further advice please call our New Client Services Team on 0500 152 500 / 01442 232700 or e-mail rachel@sjdaccountancy.com
You'll be surprised how little time it takes and just how easy it is.
And most importantly, in a recent survey 98% of our clients rated SJD as 'better than other accountants' - we are working hard to convince the other 2%!
