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| CONTRACTING |
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Setting Up As A Contractor
There are 3 main routes, which you may follow when you have decided
to enter a contract:
Agency Employee
You'll become an employee of the agency who'll then place
you on a contract at the premises of a third party. The following
points are relevant to agency employees:
a) Earnings will be higher than those of direct employees, but will
generally be approximately 15% lower than those of the other three
routes above. This is because the agent will have to finance employers’
National Insurance on the earnings of the contractor.
b) Full tax and national insurance will be deducted from earnings
at source.
c) None of the possible tax advantages of running one’s own business
will accrue to any agency employee.
Umbrella Company (Composite Company)
This is a halfway point between the agency employee and Limited Company
routes. The Umbrella Company is set up and run by a third party (often
a firm of accountants). You’ll become an employee of the Umbrella
Company and all invoicing, VAT returns, tax, administration, book
keeping etc are handled outside the control of the contractor. You’ll
be paid a salary and a reasonable out-of-pocket expenses related to
your earnings. The concept is directed primarily at short-term contractors
(i.e. contracts up to 3 months), and some contractors use it as a
first step towards having their own company.
Limited Company
This is route, which is taken by the vast majority of contractors.
You’ll form, or buy, a limited company, the limited company enters
into a contract with the agent to provide specific services to a third
party, and then the limited company employs the contractor to perform
these services in fulfilment of its contract. You would generally
become a director and major shareholder of the company.
Examples of Companies to Contact:
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Computer Giants |
01223 362400 |
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JSA Contract IT |
01923 257325 |
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Drole Computing |
0800 849 4343 |
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Filetravel |
0151 922 8877 |
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