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Temping work - Limited Company

So after searching for work for over a year I have finally been offered a temping role back in the city. It's only a 3 month rolling contract but hopefully this can lead to a full time position for me.

Having looked into this I have been asked in preperation for "onboarding" to provide my limited company details and my insurance details. Having only ever worked as PAYE I don't know anything about this or even where to start. Apparently I need to set up a seperate bank account amongst other things.

If anyone understands this and can point me in the direction of getting this all set up (apparently I need to do it today as my start date is planned for Monday) then it would be greatly appreciated.

thanks
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Comments

  • if you need to set up today a new limited company and bank account it will be fairly expensive. Getting a limited co can be done in a day but getting a bank account today is difficult as banks are slow. Metro Bank are the quickest I know who can open personal bank account on the spot but unsure re a limited company bank account.
  • It may be easier to use an "Umbrella" company for a short term role - some of the benefits, minimal hassle. Try Giant or Focussed.

    I am sure you can operate PAYE if you want to but you may have been quoted a limited company rate.
  • NugNug
    edited May 2013
    I used an accountancy firm that specialised in one man Limited companies when I was freelancing, nixonwilliams.com. There are loads out there though. They can register you with companies house and help setting up bank accounts etc. Agree with others regarding umbrella companies for shorter term.
  • Look into an umbrella company. Its been I while since I contracted in IT, but that's what I did then. Much easier than setting it up on your own - though you'll have to pay them a fee for the privilege.
  • i would have thought that you are not forced to set up a ltd company you can choose to work paye if that is your wish id suggest you use an umbrella company if its something you plan to do short tem .Giant is about the biggest in my market
  • http://pointbeing.net/weblog/2012/02/contractors-a-limited-company-is-not-tax-efficient.html

    You can go through an "umbrella" company whereby they invoice the principal and pay you. I have never used them but I understand you pay a reduced rate of tax/NI.
  • Greg, are you working through an agency? if so they should be able to sort this out for you. If not just speak with your HR and they will help I'm sure.
  • Not sure of your situation, but by far the majority of companies I freelanced for would not use me unless I was limited. Of course I could have gone through an umbrella company but the calculations I did seemed to suggest there was a huge difference in my take home pay. However there was a lot more paperwork for me.
  • edited May 2013
    Blackheath, don't bother limited for what could be only 3 months.

    I used Giant for 6 months in 2011 on a contract with Nomura. Was impressed at what you can claim back off of tax. Also they only pay out tax on minimal wage and you take the rest in "dividends". They will talk you through it.
  • Thanks guys. It's a 3 month rolling contract so hopefully will be more long term than that.

    I spoke to the agency and they have recommended me a company to use who I have just spoken to.

    It seems I can earn up to £600 a month take home pay more by setting up through them as a limited company rather than using their umbrella option so it's a no brainer for me.

    thanks for all your responses. It seems particularly complicated. But fortunately it sounds like they're going to do all the hard work for me so to maximise my earnings it seems that's the way to go.

    Lets just hope I can do well there and finally have some money coming in!
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  • Or if you can ask the umbrella companies to go sole trader, that way they charge you a minimal fee of about £18, then it's down to you to declare
  • Blackheath, don't bother limited for what could be only 3 months.

    I used Giant for 6 months in 2011 on a contract with Nomura. Was impressed at what you can claim back off of tax. Also they only pay out tax on minimal wage and you take the rest in "dividends". They will talk you through it.

    I think the legislation around that dividend type payment has changed now to stop people who just fancy avoiding some tax - Giant will know.
  • Something similar happened to me about 6 years ago...between jobs I was offered an attractive day rate to help a firm out...I opted to be a sole trader instead of becoming a limited company...I dont know if you can still do it but all I did was ring up hmrc and told them, they helped me set up paying my stamp and told me just to ring them when I stopped as a sole trader and started a full time job again...then I just invoiced the firm I was working for and bought premium bonds with 40pct of what I charged so that I had more than enough to pay my tax about 6 months later...
  • edited May 2013
    Potential minefield and you'll get a lot of good advice elsewhere. However a few other things to consider/ look out for if you set up a limited company;

    You're going to need an accountant unless you do your own books and tax returns. Your accountant will probably expect you to keep records of your own so discuss this upfront and make sure you do it regularly otherwise an annoying backlog will build up!

    You're exempt from employers liability insurance if you're the sole shareholder in your company (check that though to be sure/ ask accountant). You'll probably need to point this out to the agency (Not worth assuming they are your friend or expert in all things financial).

    Also you become 'self-employed' so forget many of the legal rights and protections workers get. (though temps/ casuals have never done well from employment protection law and the increased income certainly goes a way to compensating this anyway!). H&S and some anti-discrimination laws continue to apply.

    Something quite scary for a lot of contractors are hmrc's IR35 rules. These are deisgned to stop people opting out of paye just to make tax gains. Basically you need to be seen to running a business and taking risk like a business owner in the hmrc's eyes (i.e. different to a worker in the paye sense). There are grey areas in this - and controversy and much of the hmrc guidance is written to deter rather than instruct. HMRC do provide a service where they will assess your situation to determine whether your situation falls outside or is captured by IR35. You hope for it to classed as low risk, hence likely to fall outside IR35. If classed as low risk they are more likely not to investigate you, should your number come up (it's rare apparently but stressful if it does). Some accountancy services will offer an IR35 case management service for a small extra fee to protect your interests during an IR35 investigation. You decide if you want that. Eitherway i definitely suggest you keep good records, including copy of the recruiters advert, contract documentation, corres with your client confirming your tasks/ changes in duties etc, details of contract extensions, and other basic notes i.e. about your company and its environment as it changes (a 'corporate diary' in other words).

    Hope that's some help. Hope you enjoy the extra income and freedom that comes with self-employment! And don't forget your mates if you do really well out of it ;)
  • Something similar happened to me about 6 years ago...between jobs I was offered an attractive day rate to help a firm out...I opted to be a sole trader instead of becoming a limited company...I dont know if you can still do it but all I did was ring up hmrc and told them, they helped me set up paying my stamp and told me just to ring them when I stopped as a sole trader and started a full time job again...then I just invoiced the firm I was working for and bought premium bonds with 40pct of what I charged so that I had more than enough to pay my tax about 6 months later...

    Just thought about the dates. I didn't have to pay any tax for 14 months...I remember ringing hmrc querying it because I didn't want any comeback on it and they said hold on to the money until it was claimed by them...probably all changed now though...tax return was a piece of cake when I came to doing it online...
  • It's not complicated. This is what my wife did - also onboarding. Interestingly she was also 'let go' when MF Global went into Administration.

    Setting it up, and running it is, literally, a piece of cake. I would avoid the agencies as they charge a fortune to do it. If you want some more detail then let me know and I'll point you in the right direction.

    You should note, however, that you need to guard against IR35 as it can make your tax bill a lot higher.
  • edited May 2013
    If you are going to guard against IR35 you will need agreement that you will not receive any supervision while doing the job and that you can substitute yourself for anyone of your chosing if you wish.

    ....and this is why someone like the firm's window cleaners will be genuinely offering a limited company service and why most interims or temps are not and just avoid tax.
  • PL54 said:

    If you are going to guard against IR35 you will need agreement that you will not receive any supervision while doing the job and that you can substitute yourself for anyone of your chosing if you wish.

    ....and this is why someone like the firm's window cleaners will be genuinely offering a limited company service and why most interims or temps are not and just avoid tax.

    agree ...especially last paragraph

  • Thanks guys. It's a 3 month rolling contract so hopefully will be more long term than that.

    I spoke to the agency and they have recommended me a company to use who I have just spoken to.

    It seems I can earn up to £600 a month take home pay more by setting up through them as a limited company rather than using their umbrella option so it's a no brainer for me.

    thanks for all your responses. It seems particularly complicated. But fortunately it sounds like they're going to do all the hard work for me so to maximise my earnings it seems that's the way to go.

    Lets just hope I can do well there and finally have some money coming in!

    I currently work through my limited company and would advise you not to use an umbrella company as you will lose out. I can answer any questions or provide info if you need it just give me a shout.
  • Interesting to contrast some of the comments on this thread with those on the earlier thread about Amazon and Google... #justsaying

    Anyway, as PL35 says one of the key tests that HMRC would look at in an IR35 situation would be the substitution test, i.e. if you were sick/unavailable/indisposed one day could you send someone else to do the job on your behalf. If this answer is no, this would count strongly against you (although it is not the only thing they look at of course).
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  • Jodaius said:

    Interesting to contrast some of the comments on this thread with those on the earlier thread about Amazon and Google... #justsaying

    Anyway, as PL35 says one of the key tests that HMRC would look at in an IR35 situation would be the substitution test, i.e. if you were sick/unavailable/indisposed one day could you send someone else to do the job on your behalf. If this answer is no, this would count strongly against you (although it is not the only thing they look at of course).

    There is a difference between individuals and multi-national companies. Who pays more tax than they need to?

    As has been pointed out,if you go freelance through your own limited company or through an umbrella, you are taking more risks than someone on PAYE, so you are not conning HMRC or paying less tax than you should. I was freelance for 20 years I never got one paid holiday or a single day's paid sick leave or redundancy or pension or any other benefit you would expect to get from a permanent job. During my time the tax rules got tighter and tighter, until IR35, which seemed to be a direct attack on the way I liked to work. I got paid more money and I paid less tax (certainly in the early days) when I was working, but I had periods when I had no work also, I became seriously ill about 15 years ago and had several months off with no pay, so it's swings and roundabouts.

    Sorry for the rant - this is something I feel strongly about.

    I now have a permanent job, but with this recession I find that the benefits are almost non-existent.

  • Saga. 25 years Limited Company in IT. I feel your pain dude.
  • Saga Lout said:

    Jodaius said:

    Interesting to contrast some of the comments on this thread with those on the earlier thread about Amazon and Google... #justsaying

    Anyway, as PL35 says one of the key tests that HMRC would look at in an IR35 situation would be the substitution test, i.e. if you were sick/unavailable/indisposed one day could you send someone else to do the job on your behalf. If this answer is no, this would count strongly against you (although it is not the only thing they look at of course).

    There is a difference between individuals and multi-national companies. Who pays more tax than they need to?

    As has been pointed out,if you go freelance through your own limited company or through an umbrella, you are taking more risks than someone on PAYE, so you are not conning HMRC or paying less tax than you should. I was freelance for 20 years I never got one paid holiday or a single day's paid sick leave or redundancy or pension or any other benefit you would expect to get from a permanent job. During my time the tax rules got tighter and tighter, until IR35, which seemed to be a direct attack on the way I liked to work. I got paid more money and I paid less tax (certainly in the early days) when I was working, but I had periods when I had no work also, I became seriously ill about 15 years ago and had several months off with no pay, so it's swings and roundabouts.

    Sorry for the rant - this is something I feel strongly about.

    I now have a permanent job, but with this recession I find that the benefits are almost non-existent.

    Actually to a large extent I agree with you on the tax issue, and have previously spoken out in defence of tax avoidance - why should anyone (individual or company) pay more tax than they need to? I just thought it was interesting that there was fairly widespread condemnation of Amazon and Google on this forum, whereas a couple of weeks later a thread pops up where everyone is suddenly giving advice on tax avoidance!

    Where I think we differ is that I don't see a huge difference between individuals and large companies. If everyone in the UK was able to work through an umbrella company, the treasury would suffer a massive loss and tax rates for such companies would have to go up. So, by definition, the fact that some people can benefit from this sort of arrangement only comes about from the fact that most people realistically can't. Not saying this is necessary wrong or unfair (see next paragraph), but it is a fact nonetheless.

    This brings us back to the old employed vs self-employed debate, which was never my intention when I posted. I think you summed it up perfectly when you said 'swings and roundabouts'. You make valid points about a lack of paid holiday, sick leave, and job security, but I could counter by saying that this is why freelancers tend to charge higher daily rates to compensate for this. It's a personal lifestyle choice either way. Personally I would rather earn less and have the other benefits of paid employment, but this isn't for everyone. But it does annoy me when people are willing to charge 'freelance' rates and then still moan about a lack of holidays, pensions, sick leave etc. (That wasn't a personal dig, just speaking in general terms because I do hear it quite a lot).

    I don't believe that IR35 was ever intended to be an attack on the 'genuine' self-employed. However, there are several industries where these sort of arrangements were being set up deliberately to reduce tax liabilities, which really is stretching the concept of 'avoidance' to its limits. Indeed, this seems to be the inference of the original post (albeit at the request of the employer) - whether the OP intended it or not.
  • Agree that IR35 is a pig to get round. It's all about proving that you aren't a 'disguised employee' From memory some of the indicators they use are Substitution, having multiple clients, using your own Ltd Companies kit to perform the role, having a staff pass that differs from standard employees and some others that I'm struggling to remember. That might all be a bit out of date now as this was a few years ago I was dealing with it.

    Even if you don't fulfil the criteria you could play the numbers game and hope they don't have the resources to investigate but be aware that if they take an interest you'll have to pay any tax owed back.
  • I think IR35 was originally sold as a means of protecting workers by stopping ruthless unscrupulous employers from pretending that permanent employers were temp. In some industries this may have been valid (e.g. cleaners), but not in mine (i.e. business analysis). I was ecstatically happy to be treated as a temp - I didn't want to be protected - I looked after myself - I paid into my own pension, I saved so that if I was out of work or ill the mortgage still got paid, etc, etc.

    I never whinged about the lack of benefits personally and I don't know anyone in my industry who did - we were paid handsomely and we accepted the risks.
  • Saga Lout said:

    I think IR35 was originally sold as a means of protecting workers by stopping ruthless unscrupulous employers from pretending that permanent employers were temp. In some industries this may have been valid (e.g. cleaners), but not in mine (i.e. business analysis). I was ecstatically happy to be treated as a temp - I didn't want to be protected - I looked after myself - I paid into my own pension, I saved so that if I was out of work or ill the mortgage still got paid, etc, etc.

    I never whinged about the lack of benefits personally and I don't know anyone in my industry who did - we were paid handsomely and we accepted the risks.

    That's not quite how your earlier post reads. Either you like being excluded from PAYE benefits, or you justify the tax avoidance because you don't get them. You can't, realistically, be in both camps!
  • Saga Lout said:

    I think IR35 was originally sold as a means of protecting workers by stopping ruthless unscrupulous employers from pretending that permanent employers were temp. In some industries this may have been valid (e.g. cleaners), but not in mine (i.e. business analysis). I was ecstatically happy to be treated as a temp - I didn't want to be protected - I looked after myself - I paid into my own pension, I saved so that if I was out of work or ill the mortgage still got paid, etc, etc.

    I never whinged about the lack of benefits personally and I don't know anyone in my industry who did - we were paid handsomely and we accepted the risks.

    That's not quite how your earlier post reads. Either you like being excluded from PAYE benefits, or you justify the tax avoidance because you don't get them. You can't, realistically, be in both camps!
    agree !

  • Ask Nathan, he has a wealth of information and experience of all work related issues.
  • Saga Lout said:

    I think IR35 was originally sold as a means of protecting workers by stopping ruthless unscrupulous employers from pretending that permanent employers were temp. In some industries this may have been valid (e.g. cleaners), but not in mine (i.e. business analysis). I was ecstatically happy to be treated as a temp - I didn't want to be protected - I looked after myself - I paid into my own pension, I saved so that if I was out of work or ill the mortgage still got paid, etc, etc.

    I never whinged about the lack of benefits personally and I don't know anyone in my industry who did - we were paid handsomely and we accepted the risks.

    That's not quite how your earlier post reads. Either you like being excluded from PAYE benefits, or you justify the tax avoidance because you don't get them. You can't, realistically, be in both camps!
    I've obviously not made myself clear? I don't know about "like", but I accept that as someone who was working freelance I was not entitled to "PAYE benefits" because I was not a permanent member of staff. In my earlier post I listed the benefits I didn't get - I was not whinging that I was hard done by, just stating facts. I didn't avoid tax by the way - I don't have to justify anything - I paid the correct amount of tax under the law for the way in which I chose to work. Where do you get the "two camps" from? Are you saying that I should like being excluded from "PAYE benefits" and like paying lots of tax???
  • its not difficult--been doing it for 7 years.
    Pay yourself a wage the lowest you can --that gets you nil tax or low tax. pay yourself e regular dividend (3months) you dont pay NI on the dividend you do pay tax.
    Im VAT registered---you may wish to or not(depends what your plans are)
    There is the corporation tax which is a pain but my accountant sorts that out.

    Make sure you plan ahead for when your between contracts.
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