When looking to make the move to contracting, there are a lot of different aspects to look into, from getting a contract,writing a contractor CV to actually forming your company and much more. But why should you move from permanent to contracting?
When most people start thinking about contracting, the most obvious benefits are the increase in pay, flexibility and work / life balance. SJD Accountancy have the 5 reasons why you should make the move to contracting.
Contractor rates of pay can land anywhere between £250 – £1000 per day, depending upon your experience and industry. To find out an estimation of your daily rate, take a look at our take home pay examples.
Contractor’s are paid a higher rate than almost all permanent employee’s because their skill sets are very industry specific and help to fill a knowledge gap in the workforce.
Each contractor is different and the more experience you have as a contractor, the better your chances of commanding a higher daily rate. Their rate of pay is higher because contractors are flexible workers and most of the time only work on 3-6 month contracts.
As the dividend tax changes draw closer, those who are going to be affected are increasingly concerned that the proposals demonstrate a lack of understanding about what it’s like to run your own business on the part of the chancellor. Some believe that a thorough overhaul of the taxation system is the only way to resolve the issues that prevent employees and independent professionals from being able to operate on a level playing field, but whether that’s likely to happen or not is a matter for debate.
Chancellor’s dividend payments antagonise critics
The planned changes to the way dividends are taxed have attracted a significant amount of criticism from those who believe that this will further disadvantage those who work for themselves. This has been fuelled by the knowledge that George Osborne himself will be benefiting from a £1,200 dividend payment from his family business, a company which hasn’t paid a single penny in corporation tax over the last seven years. This has prompted accusations that the chancellor’s ability to understand the impact of his proposals is limited by his lack of experience when it comes to working for himself.
As the financial year draws to a close, there are always jobs to be done to ensure that your finances are in order. For those who are super efficient, April is the time to complete their self assessment tax return, but for contractors, April 2016 means a lot of changes and being prepared could save an awful lot of money.
HMRC define SDC and attract criticism from experts
Many contractors are eagerly awaiting the end March when the promised guidelines for supervision, direction and control will be published by HM Revenue and Customs. The thorny issue of what constitutes SDC has been the subject of much discussion over recent months, not least because there is some concern over the manner in which the new travel and subsistence expenses rules will be applied. Despite plenty of advice having been given to the government on this matter, their most recent efforts to define SDC have been widely panned, so the end of March could see an end to the significant speculation on the matter.
Anyone starting a business before the internet age would have had to go through a potentially long and drawn out process of research and phone calls just to get themselves registered as self employed. However, the advent of increasingly well-connected technology means that now all these jobs can be completed online within minutes, not to mention the wealth of information available to anyone who wants to ensure that they are compliant with all the procedures involved in working for themselves. […]
January is often a month of cutting back on spending in the wake of Christmas, getting the New Year’s resolutions off to a good start and trying to shake off the winter blues, but for independent professionals the self assessment deadline always looms large. As those who are well-prepared enjoy the fruits of their good planning, there is also inflation news and a long-awaited review of some controversial legislation concerning international contractors.
Contractor victory as 2,000 APNs are withdrawn
After campaigns and discussions about the way HM Revenue and Customs were using the legislation which is designed to help them pursue those who fail to pay their taxes, there has been a significant victory this week. 2,000 of the controversial Accelerated Payment Notices issued in April last year were withdrawn when it was discovered that they had been issued to people who had been part of the Montpelier IR35 Manx Partnership arrangements. Because HMRC were notified of the scheme, it was mistakenly included in the APNs but there was no requirement to do so under the Disclosure of Tax Avoidance Schemes rules.
Contractors are always keeping their eye on the news to ensure that they are aware of upcoming opportunities, especially when they can see the end of their current contract in sight. Being on the lookout for the next job means that specialists can maximise their earning potential to ensure that they command rates which are commensurate with their experience and qualifications. With businesses setting out their plans for the year ahead, this is an ideal time of year to put the feelers out.
Cost-cutting measures could work in favour of IT contractors
While the news that businesses are cutting costs can often mean that the spend on flexible workers is reduced, firms are becoming increasingly aware of how independent professionals can help them to save money in the long run. As one of the most profitable sectors for IT contractors, news that the financial services industry is likely to be trimming their budgets might have seemed like bad news for IT contractors were it not for the fact that many companies are planning to be more strategic in their operations. This could mean that temporary and flexible staff are needed to ensure that they have the level of expertise available to them when it is needed, not to mention the focus on regulation which will always require significant input from IT experts.
A woman’s work may never be done, but for independent professionals there is always something on the to-do list. As the deadline for filing accounts with Companies House looms, it is also time to take advantage of the Lichtenstein Disclosure Facility, review the new regulations about pensions and consider a career with John Lewis.
Companies House filing deadline approaches
Processing for paper accounts is taking more than the normal seven days as the deadline for companies to submit their accounts approaches. This is always a busy time of year for Companies House, but their recent announcement has been interpreted as a sign that they have reached their peak of receipts earlier than normal this year. As always, completing the accounts as early as possible is the official recommendation to avoid penalties.
December can be a be a month of feast or famine for contractors as some businesses are taken up with parties, social events and staff absences whereas others experience high volumes as the Christmas shopping season really takes off and they attract more customers than the rest of the year. For many independent professionals, the knowledge that the tax return deadline is only just around the corner will always be in the back of their minds no matter what else they do over the festive season.
Rates increase for IT contractors
While contractors can theoretically set their own rates, there is a limit to what the market will bear which is why fluctuations in the average rate are of interest to anyone contracting in the relevant sector. IT contractors will be reassured to know that 2015 has seen an increase in their average rates in comparison to 2014, counteracting a slight drop-off in demand. 14 of the major areas of expertise in the IT sector saw an increase in the rates that contractors who had those skills were able to command between July and September 2015 and senior IT managers were enjoying rates rises of up to 12 per cent year-on-year. There has been a 35 per cent rise in the number of firms recruiting flexible workers to fill business intelligence roles and there is also an increase in the number of vacancies available for software testers.
Every day brings financial news that the experts try to interpret in order to predict the impact that it will have on businesses, individuals and the country as a whole. This month has seen some changes which could have far-reaching effects, but with mostly positive outcomes predicted that means good news for many contractors.
Public sector appeal diminishes in favour of private sector
Austerity has taken its toll on many people in the UK, but cost cutting exercises in local authority recruitment has seen many IT contractors failing to find the kind of opportunities that they once would have done. Spending on flexible workers has been cut back in order to manage reduced budgets, and although it has meant a dearth of jobs for contractors, this was not an entirely unexpected outcome as far as the sector was concerned. What has softened the blow somewhat though is the increase in the number of vacancies in the private sector which has seen demand for IT contractors on the rise. Transport, leisure and telecoms are all taking advantage of the flexibility of the contracting workforce.
Any news headline can spell significant changes to contractors and the way they work and whilst some are obvious, some of the game changers aren’t obvious until the detail of the story is released. With front page headlines and smaller stories impacting on contractors this month, there is good reason for contractors to keep their eye on the news to ensure they are up to speed with the stories that could affect them.
The ‘snoopers’ charter’ could make work for IT contractors
Law enforcement agencies will be able to access more personal data than ever before under the new ‘snoopers’ charter’, with the changes in legislation allowing them to detect and prevent crime by accessing communications data with new powers that haven’t been in place before. IT contractors could find that this will affect the way they work, not least because they will need to know how the changes will affect business and personal communication as crime prevention organisations will be entitled to access and retain any data that they believe could help. Understanding encryption and how to intercept it will become increasingly important in order to comply with the legislation.