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> You should have savings to cover at least 4 months of > your usual expenses. You will spend some money > establishing a company. It may take several w

> You should have savings to cover at least 4 months of > your usual expenses. You will spend some money > establishing a company. It may take several weeks to > find your first contract. If you wanted to be extra safe, sure. I made the switch when I was heavily in debt, and it helped me get out of debt, so YMMV. > A service like www.formationsfactory.co.uk will make the > incorporation process easy. Actually it's super easy online using the UK government sites now. I set up a company (again) about ~14 months ago, and it took about an hour of filling in .gov.uk forms online. I would recommend just doing it yourself. Setting up a bank account is pretty easy too, and I'm not sure why you'd use a third party for it. 15 minutes of filling out HSBC forms did it for me. > Finding your first client might be hard. Sure. Most permanent jobs have a 4 week notice period, and you can find contractor roles happy for you to start in 4 weeks. Line one up before you quit, and there's no 2-3 week mad rushing around trying to find a contract. If you're just getting in to it, start with a recruiter. They'll eat in to your contract rate, for sure, but they'll also have a far better visibility of the market than you, they'll get better feedback from clients than you, and they'll help chase your invoices and so on. I worked as a contractor for a long time and never had a bad experience with a recruiter, where the OP seems to have had a dreadful time... > rates Go look on jobsite. For Central London, a developer should be asking for £300-£600/pd depending on seniority and what they're doing. > IR35 In addition to IR35, they're about to massively change how dividend tax works. You might be better off looking at an umbrella company like Giant, who'll save you a lot of accounting hassles...

PovilasID 11y ago
"Actually it's now super easy online using HMRC's site now” - You probably have Companies House in mind. HMRC deals with things like VAT and PAYE registrations. Companies House can be used for company incorporations. Furthermore, you can only use Model Articles on Companies House website. This means that you cannot set up multiple share classes during company incorporation (e.g. voting shares, profit sharing shares).
- UK-AL 11y ago
  I would expect contractors would not need those.
- wfn 11y ago
  > This means that you cannot set up multiple share classes during company incorporation You actually can - you have to select from a pre-given list of share classes, though, but I did a priority-and-ordinary shares setup thing online via companieshouse - unless that's not what you meant?
- pjc50 11y ago
  You can always do it "manually" by sending in your articles, the form, and your £25. I did this years ago for a company limited by guarantee.
kozhevnikov 11y ago
> change how dividend tax works Is there a good summary you would recommend for accountancy-challenged developers? Should we get any leftovers in business bank account out through more dividends now and accrue higher personal income tax or wait and see?
- majc2 11y ago
  It depends on what your strategy is and the specifics of your situation. http://www.contractoruk.com/money/ifas_guide_avoiding_new_dividend_tax.html http://www.contractoruk.com/money/ifas_guide_avoiding_new_di... has a generic guide about the new dividend tax. IMHO, just get an accountant.
  - kozhevnikov 11y ago
    I have a popular one, and they are rubbish. I'm on my first contract and I have no idea what I'm doing tax-wise. After £10.6k in salary they say one could take £28.5k in dividends before higher tax kicks in. So what do people do with the rest? Accept hight tax or leave it in business bank account and wait for next tax year?
    - peteretep 11y ago
      You can stick £40k in your pension as an employer contribution...
    - charlesdm 11y ago
      Not all accountants know a lot about tax. Tax lawyers will be better at reducing your tax rate, though they can be expensive (and unnecessary for basic stuff). The general 'rule' is you tend to only take out as much as you need. It's usually smart to always use the lower rate tax bands and then decide what to do with the excess that is left in the company. However, since they're increasing the tax rate, now might be good time to take out a higher dividend, since you'll pay more to take it out next year. If (tax now < tax later) -> take it out. :-) Unless you're wealthy enough to never have to declare dividends again, you'll want to take out more this year. Also, don't forget to expense as much as you legally can. That's all tax deductible BEFORE corporate tax. What can you do with the rest? a. Invest it (compound interest: shares/bonds/property/etc) b. Give yourself a loan from the company. You'll have to pay interest, but it's a relatively low rate (3.25% p/a I believe). Wealthy people tend to be (relatively) poor in their personal name, but own a lot of stuff through companies - e.g. planes, boats, property.
majc2 11y ago
Agree with all of this post. The only thing I'd expand on is that there is a big difference between permy recruiters and contract recruiters. The best contract recruiters know that they will have roles to fill in 6 months time, so they're going to want to keep you on their 'roster'. The best contractors know that contract recruiter help you make more money.
- drrob 11y ago
  Agree entirely. All my contracts come through recruiters, and I've never had a problem with them, once you get a good rapport going with a decent contract recruiter they'll do all the hard work for you.
gadders 11y ago
>> Sure. Most permanent jobs have a 4 week notice period, and you can find contractor roles happy for you to start in 4 weeks. Line one up before you quit, and there's no 2-3 week mad rushing around trying to find a contract. One other thing to bear in mind - if you apply for a job in Banking the credit history, criminal records, references etc check will take 2-3 weeks anyway.
dspillett 11y ago
> Most permanent jobs have a 4 week notice period Really? In experienced level dev jobs? Most of the people I know are on two months notice. Three months, which is what I'm tied to, doesn't seem uncommon for senior devs/DBAs/similar.
- peteretep 11y ago
  That's been my experience when hiring people. I only hired one person with a 12 week notice, everyone else was 4 weeks. YMMV, I guess.
  - Symbiote 11y ago
    I have a 12-week notice period (UK government), as do most of my friends (mostly finance). We'd all started on 4 weeks as junior developers, but it had been increased with promotions.
- tom-lord 11y ago
  It's also worth noting that (at least in the UK) such notice periods are not legally binding. You can only be forced to give a notice period up to your payroll pay frequency. So for example, if you get paid monthly then you cannot be sued for failing to give > 1 month's notice! ... But of course, most people will still honour their company's "3 month notice" (or whatever) period out of good faith, as it's generally a good idea not to burn bridges.
  - mattgibson 11y ago
    I wasn't aware of this. Do you happen to know which law/act/whatever covers it? Would have come in handy a few weeks ago when I was trying to negotiate my way out of a 3 month notice period.
  - choult 11y ago
    Are you sure about that? There is a statutory notice period of one or two weeks depending on how long your employment has been, but this appears to be trumped by contractual agreements: https://www.gov.uk/handing-in-your-notice-resigning-leaving-job https://www.gov.uk/handing-in-your-notice-resigning-leaving-...
Keats 11y ago
Agree with pretty much everything. Recruiters are annoying but some companies will only hire contractors through recruiters so it's worth spending a little time dealing with them (but don't hesitate to stop talking to any that isn't professional, there are plenty others). For the rate it depends on the language and the industry as well, java in finance is always going to be higher than python in a startup but if it's below 300/350 you can walk away. I stopped being a contractor last year, i'll have to check those dividend tax changes
- CodeSimian 11y ago
  What made you do the switch back to permanent?
  - Keats 11y ago
    I started my own agency with a couple of friends (link in profile)
colinramsay 11y ago
Does anyone have any experience with a company like Giant or similar? Do they allow contractors who remote work?
- peteretep 11y ago
  People I know who've worked with them are pretty happy. They've got a reputation for being super super responsive, too, so email or ring them and ask?
- cjrp 11y ago
  They're just a middle-man who invoices on your behalf and pays you based on that. Using someone like Giant you're ceding a lot of the financial (tax) advantages of contracting though, since you pay tax as a PAYE employee.
  - peteretep 11y ago
    Those tax advantages will start to disappear next year.
    - cjrp 11y ago
      Obviously it depends on how much you earn and pay yourself, but I think for most people they'll still be better off as a limited. Next year's changes only add up to about 2-3% increase in tax for someone taking minimal salary and the rest as dividends.
- deleted 11y ago
  [deleted]
- drrob 11y ago
  In the past I've worked under Giant and Parasol. I used Giant back in 2008 when I wasn't sure if I was staying in contracting for forever. All umbrellas are much of a muchness; there's a legal limit on how much tax efficiency they can help you with, so you'll take home the same with whoever you choose. In the long term a limited company is definitely the way to go.
jchomali 11y ago
I totally agree
piotrp 11y ago
> For Central London, a developer should be asking for £300-£600/pd depending on seniority and what they're doing. That seems pretty low to me. Here in the Netherlands contract developers get about the same, between £400-£600/pd (actually between 70~90 euro/hour) but cost of living is way lower than in central London.
- tomelders 11y ago
  There's less supply in the Netherlands. I get a lot of offers here in London for contracts in the Netherlands.
  - ukigumo 11y ago
    tell me more...
    - tomelders 11y ago
      Not much more to say. Companies in the Netherlands are advertising roles and contracts here in London. I have friends working in agencies in the Netherlands and they have a hard time sourcing developers locally.
- radicalbyte 11y ago
  Interesting, is that via an agency or via your own clients? I'm a Tech Lead and would like to start contracting at some point.
- jwmoz 11y ago
  Where do you go for your contact leads in NL? I know the London market well but find it hard to find any decent Euro contracts.
  - ownagefool 11y ago
    I'd like to know this too.
harel 11y ago
In the 14 months you've had the company registered, have you had any dealing with Inland Revenue inquiring about your accounts or coming to check up on you? I'm asking because at my current work they were always coming to check since the business got its funding. There was no wrong doing of course, but it did waste a lot of everybody's time.
- peteretep 11y ago
  I've had ltd companies in various forms for ~ 10 years. No check-up yet, other than my most recent VAT registration, and even that was simply them asking me to send a few documents. I have no idea if that's typical, but I always buy tax investigation insurance.
brc 11y ago
Amazing that 15 years ago I was making more than 400 pd (contract was actually 45 ph, and you could push overtime if you wanted) and I was pretty junior at the time. And I was only paying 130 pw rent in Zone 2. Ah, boom times. Don't you just love 'em, and miss 'em when they're gone? edit : original post had a calculation mistake in it.
- davedx 11y ago
  The math suggests you were working 13 hour days? Are you sure that's correct?
  - brc 11y ago
    Ah yeah, you're right. It was a while ago...getting fuzzy. It was more like 400 pd
brc 11y ago
On the 4 months savings thing. When I arrived in London (as a foreigner fresh off the boat) I had about 4 weeks worth of money. I couch surfed and worked the recruiters endlessly and landed a job in 10 days. It wasn't the greatest job but it was a start - a 3 month contract building a new system. It's amazing how motivated you can be when you see your bank accounts date with destiny. After the contract was signed I used the remainder of my cash and got a 'bedsit' - a tiny room - and asked for my first weeks pay to be paid on Friday afternoon. Within a month I had a place to rent, a social scene and was busy working on getting the next job. So if you don't have any dependents I think you can take the high risk plunge and go for it. Certainly the best decision I ever made in my entire life - and by that I mean life changing in a way that I cannot even imagine how my life would have been had I stayed on my prior path.
- logingone 11y ago
  In one of your other comments, you note that was in boom times.
  - brc 11y ago
    Kind of - it wasn't booming when I first started, that was later on. I had a friend who made the decision to do the same thing, but arrived in October 2001. After three months of job searching and finding nothing, he spent all of his cash and then some, and had to return broke and dejected.
fasteo 11y ago
>>>> it took about an hour of filling in .gov.uk forms online. I would recommend just doing it yourself. Here is a good guide from a gov.uk site [1] [1] https://www.gov.uk/limited-company-formation/overview https://www.gov.uk/limited-company-formation/overview

PovilasID 11y ago

"Actually it's now super easy online using HMRC's site now” - You probably have Companies House in mind. HMRC deals with things like VAT and PAYE registrations. Companies House can be used for company incorporations. Furthermore, you can only use Model Articles on Companies House website. This means that you cannot set up multiple share classes during company incorporation (e.g. voting shares, profit sharing shares).

UK-AL 11y ago
I would expect contractors would not need those.
wfn 11y ago
> This means that you cannot set up multiple share classes during company incorporation You actually can - you have to select from a pre-given list of share classes, though, but I did a priority-and-ordinary shares setup thing online via companieshouse - unless that's not what you meant?
pjc50 11y ago
You can always do it "manually" by sending in your articles, the form, and your £25. I did this years ago for a company limited by guarantee.

kozhevnikov 11y ago

> change how dividend tax works Is there a good summary you would recommend for accountancy-challenged developers? Should we get any leftovers in business bank account out through more dividends now and accrue higher personal income tax or wait and see?

majc2 11y ago
It depends on what your strategy is and the specifics of your situation. http://www.contractoruk.com/money/ifas_guide_avoiding_new_dividend_tax.html http://www.contractoruk.com/money/ifas_guide_avoiding_new_di... has a generic guide about the new dividend tax. IMHO, just get an accountant.
- kozhevnikov 11y ago
  I have a popular one, and they are rubbish. I'm on my first contract and I have no idea what I'm doing tax-wise. After £10.6k in salary they say one could take £28.5k in dividends before higher tax kicks in. So what do people do with the rest? Accept hight tax or leave it in business bank account and wait for next tax year?
  - peteretep 11y ago
    You can stick £40k in your pension as an employer contribution...
  - charlesdm 11y ago
    Not all accountants know a lot about tax. Tax lawyers will be better at reducing your tax rate, though they can be expensive (and unnecessary for basic stuff). The general 'rule' is you tend to only take out as much as you need. It's usually smart to always use the lower rate tax bands and then decide what to do with the excess that is left in the company. However, since they're increasing the tax rate, now might be good time to take out a higher dividend, since you'll pay more to take it out next year. If (tax now < tax later) -> take it out. :-) Unless you're wealthy enough to never have to declare dividends again, you'll want to take out more this year. Also, don't forget to expense as much as you legally can. That's all tax deductible BEFORE corporate tax. What can you do with the rest? a. Invest it (compound interest: shares/bonds/property/etc) b. Give yourself a loan from the company. You'll have to pay interest, but it's a relatively low rate (3.25% p/a I believe). Wealthy people tend to be (relatively) poor in their personal name, but own a lot of stuff through companies - e.g. planes, boats, property.

majc2 11y ago

Agree with all of this post. The only thing I'd expand on is that there is a big difference between permy recruiters and contract recruiters. The best contract recruiters know that they will have roles to fill in 6 months time, so they're going to want to keep you on their 'roster'. The best contractors know that contract recruiter help you make more money.

drrob 11y ago
Agree entirely. All my contracts come through recruiters, and I've never had a problem with them, once you get a good rapport going with a decent contract recruiter they'll do all the hard work for you.

gadders 11y ago

>> Sure. Most permanent jobs have a 4 week notice period, and you can find contractor roles happy for you to start in 4 weeks. Line one up before you quit, and there's no 2-3 week mad rushing around trying to find a contract. One other thing to bear in mind - if you apply for a job in Banking the credit history, criminal records, references etc check will take 2-3 weeks anyway.

dspillett 11y ago

> Most permanent jobs have a 4 week notice period Really? In experienced level dev jobs? Most of the people I know are on two months notice. Three months, which is what I'm tied to, doesn't seem uncommon for senior devs/DBAs/similar.

peteretep 11y ago
That's been my experience when hiring people. I only hired one person with a 12 week notice, everyone else was 4 weeks. YMMV, I guess.
- Symbiote 11y ago
  I have a 12-week notice period (UK government), as do most of my friends (mostly finance). We'd all started on 4 weeks as junior developers, but it had been increased with promotions.
tom-lord 11y ago
It's also worth noting that (at least in the UK) such notice periods are not legally binding. You can only be forced to give a notice period up to your payroll pay frequency. So for example, if you get paid monthly then you cannot be sued for failing to give > 1 month's notice! ... But of course, most people will still honour their company's "3 month notice" (or whatever) period out of good faith, as it's generally a good idea not to burn bridges.
- mattgibson 11y ago
  I wasn't aware of this. Do you happen to know which law/act/whatever covers it? Would have come in handy a few weeks ago when I was trying to negotiate my way out of a 3 month notice period.
- choult 11y ago
  Are you sure about that? There is a statutory notice period of one or two weeks depending on how long your employment has been, but this appears to be trumped by contractual agreements: https://www.gov.uk/handing-in-your-notice-resigning-leaving-job https://www.gov.uk/handing-in-your-notice-resigning-leaving-...

Keats 11y ago

Agree with pretty much everything. Recruiters are annoying but some companies will only hire contractors through recruiters so it's worth spending a little time dealing with them (but don't hesitate to stop talking to any that isn't professional, there are plenty others). For the rate it depends on the language and the industry as well, java in finance is always going to be higher than python in a startup but if it's below 300/350 you can walk away. I stopped being a contractor last year, i'll have to check those dividend tax changes

CodeSimian 11y ago
What made you do the switch back to permanent?
- Keats 11y ago
  I started my own agency with a couple of friends (link in profile)

colinramsay 11y ago

Does anyone have any experience with a company like Giant or similar? Do they allow contractors who remote work?

peteretep 11y ago
People I know who've worked with them are pretty happy. They've got a reputation for being super super responsive, too, so email or ring them and ask?
cjrp 11y ago
They're just a middle-man who invoices on your behalf and pays you based on that. Using someone like Giant you're ceding a lot of the financial (tax) advantages of contracting though, since you pay tax as a PAYE employee.
- peteretep 11y ago
  Those tax advantages will start to disappear next year.
  - cjrp 11y ago
    Obviously it depends on how much you earn and pay yourself, but I think for most people they'll still be better off as a limited. Next year's changes only add up to about 2-3% increase in tax for someone taking minimal salary and the rest as dividends.
deleted 11y ago
[deleted]
drrob 11y ago
In the past I've worked under Giant and Parasol. I used Giant back in 2008 when I wasn't sure if I was staying in contracting for forever. All umbrellas are much of a muchness; there's a legal limit on how much tax efficiency they can help you with, so you'll take home the same with whoever you choose. In the long term a limited company is definitely the way to go.

jchomali 11y ago

I totally agree

piotrp 11y ago

> For Central London, a developer should be asking for £300-£600/pd depending on seniority and what they're doing. That seems pretty low to me. Here in the Netherlands contract developers get about the same, between £400-£600/pd (actually between 70~90 euro/hour) but cost of living is way lower than in central London.

tomelders 11y ago
There's less supply in the Netherlands. I get a lot of offers here in London for contracts in the Netherlands.
- ukigumo 11y ago
  tell me more...
  - tomelders 11y ago
    Not much more to say. Companies in the Netherlands are advertising roles and contracts here in London. I have friends working in agencies in the Netherlands and they have a hard time sourcing developers locally.
radicalbyte 11y ago
Interesting, is that via an agency or via your own clients? I'm a Tech Lead and would like to start contracting at some point.
jwmoz 11y ago
Where do you go for your contact leads in NL? I know the London market well but find it hard to find any decent Euro contracts.
- ownagefool 11y ago
  I'd like to know this too.

harel 11y ago

In the 14 months you've had the company registered, have you had any dealing with Inland Revenue inquiring about your accounts or coming to check up on you? I'm asking because at my current work they were always coming to check since the business got its funding. There was no wrong doing of course, but it did waste a lot of everybody's time.

peteretep 11y ago
I've had ltd companies in various forms for ~ 10 years. No check-up yet, other than my most recent VAT registration, and even that was simply them asking me to send a few documents. I have no idea if that's typical, but I always buy tax investigation insurance.

brc 11y ago

Amazing that 15 years ago I was making more than 400 pd (contract was actually 45 ph, and you could push overtime if you wanted) and I was pretty junior at the time. And I was only paying 130 pw rent in Zone 2. Ah, boom times. Don't you just love 'em, and miss 'em when they're gone? edit : original post had a calculation mistake in it.

davedx 11y ago
The math suggests you were working 13 hour days? Are you sure that's correct?
- brc 11y ago
  Ah yeah, you're right. It was a while ago...getting fuzzy. It was more like 400 pd

brc 11y ago

On the 4 months savings thing. When I arrived in London (as a foreigner fresh off the boat) I had about 4 weeks worth of money. I couch surfed and worked the recruiters endlessly and landed a job in 10 days. It wasn't the greatest job but it was a start - a 3 month contract building a new system. It's amazing how motivated you can be when you see your bank accounts date with destiny. After the contract was signed I used the remainder of my cash and got a 'bedsit' - a tiny room - and asked for my first weeks pay to be paid on Friday afternoon. Within a month I had a place to rent, a social scene and was busy working on getting the next job. So if you don't have any dependents I think you can take the high risk plunge and go for it. Certainly the best decision I ever made in my entire life - and by that I mean life changing in a way that I cannot even imagine how my life would have been had I stayed on my prior path.

logingone 11y ago
In one of your other comments, you note that was in boom times.
- brc 11y ago
  Kind of - it wasn't booming when I first started, that was later on. I had a friend who made the decision to do the same thing, but arrived in October 2001. After three months of job searching and finding nothing, he spent all of his cash and then some, and had to return broke and dejected.

fasteo 11y ago

>>>> it took about an hour of filling in .gov.uk forms online. I would recommend just doing it yourself. Here is a good guide from a gov.uk site [1] [1] https://www.gov.uk/limited-company-formation/overview https://www.gov.uk/limited-company-formation/overview