If you decide to take on work as a contractor in the UK, it is worth noting certain issues you might come across in the current market. Contracting can be an extremely successful way of using your expertise and unique skillset to help businesses while earning a living, but it doesn’t come easy, and it’s important you do your research before entering the contractor market.
First, you should decide whether you want to take the Limited or Umbrella Company route – research this thoroughly and decide on the route that will best work for you. Both of these have their benefits and downfalls, but it’s important you understand the legislation that surround each to prevent any legal issues arising in the future.
Perhaps the biggest obstacle you may have to face in the current contractor market is the IR35 legislation. The IR35 makes is harder to prove that you can operate as a Limited Company – and thus receive the benefits of such. IR35 rules result in an increased tax and National Insurance liability so as to prevent contractor companies retaining their profits for future growth of the business. Contractors who are affected by the IR35 rules will then have to pay Schedule E taxation and National Insurance (following deductions for expenses). In order to avoid IR35, it is therefore under a contractor’s best interest to be viewed as self-employed under HMRC’s terms. However, since April 2017, the Public Sector have been forced to categorise a lot of their workers as employees, rather than self-employed, and Cyberteam have worked to put them through trusted Umbrella Company partners, meaning that this is not a simple step.
Choosing the Limited Company route may seem beneficial for financial reasons, it can however mean you succumb to the IR35 and still have to pay full PAYE and NI contributions. It is therefore essential if you decide to take the Limited Company route, that you obtain IR35 insurance to help with any potential IR35 investigations into your company by HMRC, as these can be quite costly and unexpected.
Cyberteam now have 25% of its contractors working in other EU countries as there are numerous opportunities with lucrative financial prospects.
Before you embark on an opportunity overseas, make sure you do your research to understand how the tax regime works in that specific country. If you establish that you are not a resident of the UK during your working period, you will be exempt from paying UK taxes, but you will be liable to the tax rules of whatever country you are working in.
Something that could potentially pose a risk to contracting overseas is Brexit. While the EU currently states you don’t require special visas to work in certain countries, this could potentially all change with rules surrounding Brexit. This has caused uncertainty for a lot of UK contractors, which is why it’s important to have the support of a recruitment agency such as Cyberteam who can help you find the best opportunities available in the current market.
If you are looking for work as a contractor or are looking for work with an umbrella company, Cyberteam have an Umbrella PSL that we encourage all contractors to go through, contact us by emailing email@example.com or call us at our offices in London (+44 (0)207 849 3082) or Leeds (+44 (0)113 398 4070).