Making the Move from Permanent to Contracting

Everything you need to know about the life of a contractor

When making the move from permanent to contracting, you will be introduced to an array of options on how to operate. Whether you decide to function through a limited company or an umbrella company – there are many advantages to be gained – keeping more of your money in your pocket.

The Benefits of Contracting

As a contractor, it is likely that you will earn a better ‘like-for-like’ rate than that of a permanent employee. Your high quality skill-set and ability to be flexible plays a large part in the reasoning behind this – making you more of an attractive option to those seeking your services. Furthermore, as a contractor, you really are in the position of being in control of your income, as you will be paid for number of hours you work.

In terms of taxation, forming a limited company will provide you with more options to reduce your tax liability. This consists of factors such as the ability to reduce your national insurance contributions as well as the opportunity to take advantage of the flat rate VAT scheme.

Whilst financial benefits are often the most appealing to those making the move from permanent work to contracting, other enticements include the ability to be flexible by choosing where and when you wish to work. Likewise, as a contractor, you can take as much holiday as you like at a time to suit you.

You do not give up the opportunity for career advancement and progression when becoming a contractor. On the contrary, it is likely that you will develop and improve your skills, ultimately making you more attractive to those requiring your services.

An Introduction to IR35

IR35 is in place to stop ‘disguised employment’ – typically whereby a permanent employee continues to work in the same position albeit as a contractor through a limited company. This is often done in an attempt to reduce their tax liability such as income tax and national insurance contributions. IR35 is government legislation and should be considered carefully by those making the move from permanent to contracting.

In essence, if you work as a contractor but do not meet HMRCs definition of ‘self-employed’, you will be affected by IR35. This will result in an increased tax and national insurance liability, as well as reduced expense opportunities. Consequences of ignoring IR35 can result in interest and penalties on top of income tax and national insurance payments.

Making the Move from Permanent to Contracting

If you intend to make the move from permanent employment to contracting, have a think about the skills you can offer and ensure that your CV showcases these well. It may also be wise to research recruitment agencies in your industry as these can assist you in finding a contract.

The key decision to make when becoming a contractor is to decide which form of operation suits you best. Working under an umbrella company offers the simplicity of being paid as a PAYE employee – removing your requirement to submit tax returns and the like. You will simply submit your timesheet and expenses to the umbrella company and then be paid (tax deducted). The simplicity offered by umbrella companies makes them ideal for short-term contracts.

Alternatively, working under a limited company requires more administration but enables you to operate more tax efficiently and claim more expenses. If you have decided to operate through a limited company, you should establish whether your contract is IR35 friendly. If your contract is not IR35 friendly, it could still be worth operating as a limited company as you can still claim some expenses as well as benefit from the VAT flat rate scheme. You then need to form a limited company and appoint an accountant – or alternatively use the services of a specialist firm.

How Futurelink Group Can Help

There are many options available to contractors – knowing what solution is right for you takes time, research and knowledge. Futurelink Group can assist you in making this important decision and ensure that you choose the solution that enables you to operate the most efficiently whilst remaining compliant with the law.

Umbrella Company:

Futurelink Group offer services in umbrella PAYE. This contractor solution employs you directly – allowing you to concentrate on what you do best. As your umbrella company, Futurelink Group are simple to join, deliver fast payments and ensure you get paid on time, every time. Furthermore, you will benefit from statutory pay (holiday, sickness, maternity and paternity) as well as the auto-enrolment pension scheme and expert guidance and support.

Limited Company:

We offer an exceptional limited company service that assists you in the setting up and operating of your company. Using Futurelink Group for your limited company support will enable you to benefit from qualified accountants as well as provide you with access to specialist tax advice in addition to other contractor services. Our team will take care of PAYE, VAT and corporation tax – as well as deal with HMRC and Companies House so you don’t have to.

By choosing Futurelink Group, you will have easy access to limited company business insurance as well as help and support in the setting up of your business bank account. Not only that, but Futurelink Group are FreeAgent accredited – offering you simple online accounting software.

CIS Solution:

If you are (or have intentions of being) a self-employed contractor or sub-contractor under HMRC’s Construction Industry Scheme (CIS), Futurelink Group can assist you.

Our CIS tax solution is fully compliant with CIS and will ensure that your tax return is completed correctly. We will take away the burden of invoicing, receiving payment and deducting CIS tax, whilst also providing you with many Futurelink Group benefits such as faster payments, a preferred-rate tax return and 24/7 access to your information.

Futurelink Group strives to give you peace of mind when moving from permanent employment to contracting. This can be a daunting experience, so using our specialist services can not only take away all the stress and hassle that comes with the move, but also ensure that you choose the right service for you.

To find out more information about our services and how we can help you to make the move from permanent to contracting, call our customer care team on 01923 277 900.

“I’ll most certainly pass on your details to people I know. You run a great service there, keep up the good work.”

William Cadden, Self-Employed Contractor

“For me, Futurelink Group was the best solution, as a foreign and a lack of knowledge of the UK rules, they were extremely helpful in all aspects. Always fast in answering all my questions. I almost didn’t do anything and they put me on track to invoice and receive my payments. I can fully recommend them.”

Ronaldo, Umbrella PAYE contractor

“WS Contractors Ltd are extremely happy with the services that Futurelink provide. The efficient and friendly staff are always willing to help and assist. The feedback from our operatives is positive and pleasing. We would recommend Futurelink to all new recruits joining our team.”

Michelle Hughes, WS Contractors Ltd

“We at Gemini would like to thank you and your team for all your help and support in connection to payroll solutions. We find Futurelink Groups approach to be responsive to action when required with a courteous and bright manner – keep up the good work!”

Frank Mcfarlane, Gemini Security Services Ltd

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Futurelink Group consists the following companies, all incorporated in England & Wales: Futurelink Group Ltd (0620 6129), Futurelink Accountancy Services Ltd (0532 0147), Team Construction Ltd (0493 5270), Horizon RCS Ltd (0620 6202) and Horizon RCS Europe Ltd (0620 6136). Privacy Policy | Terms & Conditions