Tell me about being a proper 'grown-up' contractor

[ThistleAmore]

I am in my late 30s, with a very niche and specialist skill set. It's also becoming increasingly apparent to me that I am temperamentally not a 'job person' - I'm very good at what I do, love problem-solving and fixing things, but I have a short attention span and am not terribly terrific with people, so short/mid-term contracts seem to be my thing.

I was briefly self-employed in my late 20s/early 30s, but made a bit of an arse of it by dint of not really knowing how to do the business side.

Does anybody have any practical advice about how to make this work (pensions, savings, umbrella companies etc) and how to convince my very risk-averse OH that contracting is feasible?

Get a brilliant accountant and get them to sort all that out, they will pay for themselves
If you are the sort of person who can stay on top of all the tax, vat, pensions stuff and do it yourself maybe you can save money but I know I’m not and as I said my accountant for himself
Me and DH both contract within our own LTD company so we are pretty safe from IR35 ( google it) but you may not be so check that out.
We earn around double what we would as employed people I imagine and I pick and choose what I do ( DH much higher rate and longer, usually govt. contracts). We both love it, we enjoy just taking the money and having no part in office politics or any of that crap.
I wasn’t sure it would suit DH but he’s really taken to it and wishes he had done it years ago

I think HMRC run a one day course for freelancers, something like that would probably help you?

I think HMRC run a one day course for freelancers, something like that would probably help you?

Only if you want to pay more tax than you need to. HMRC won't give any tax planning advice, only their view on the compliance formalities, which in many ways is actually wrong (there are numerous errors on their websites and published guidance which are trotted out as gospel by their own staff!). No harm in attending a course if there's one near you and it's not going to waste too much of your valuable time, but don't expect it to be much for your own benefit - most of it is about HMRC's need for you to keep proper records, follow procedures, etc.

Thank you for your advice, folks!

@Hoppinggreen - when you say 'accountant', do you mean along the lines of a professional services provider, rather than a book keeper? I think this is where I went wrong the last time...

when you say 'accountant', do you mean along the lines of a professional services provider, rather than a book keeper?

Yes, definitely, you need the "multi-disciplined" approach of an accountant who knows/understands all the different taxes etc and how they relate to eachother, as well as filing obligations for Co House. Book-keeping is simply the recording of the transactions, whereas you need proper advice as to how to pay yourselves, what expenses are allowable, pros & cons of VAT registration, pros & cons of limited company versus sole trader, etc etc - that's well above the pay grade of a bog standard book-keeper. Anyway, for a typical freelancer, the "book-keeping" is usually small scale and simple and if properly set up can easily be done by the freelancer themselves.

Thanks, @Kazzyhoward!

We have an excellent local business/freelancers' FB forum, so I will start looking for recommendations.

Yes, as kazzy says a proper accountant who can do so much more than simple book keeping.
And HMRC will be largely concerned with your tax compliance and nothing else

Thanks, @Hoppinggreen.

The main thing is finding clients who will pay what you would like to get! Is this likely to be easy for you?

Whether you are a sole trader or set up a limited company will depend on what your likely earnings might be, and whether there is any specific industry reason to be a company, e.g. it will increase the contracts available for you. A good accountant should help with this. I have found them quite variable though in terms of how proactive they are with saving you money and providing business advice.

I would advise anyone who is looking into contracting, to have a look at the intended 'off payroll' working rules Hammond intends to extend into the private sector in April 2020.

It will mean that clients (rather than the contractor) will have the responsibility of assessing the IR35 status of any contractor they engage. It will potentially have a huge impact on the earning potential of day rate contractors working via their own personal services company.