IT contrating in London - Irish company vs UK company?

the_god_swan

Hey Londoners, my plans for moving from Dublin to London in January are in full swing. And I am one excited little punter.

I work in IT as a contractor. And I consult with a company here in Dublin that also has a consultancy team/office in London. So for ease of mind I will see if my current company can hook me up with a contract when I arrive at least until I get on my feet over.

But the questions I have for any one that uses their own accountant/accountancy firm :

* Do you have an Irish registered company (or part of an Irish registered Umbrella company) or did you start up a new UK registered company?
* Are their many or any benefits to use one over the other?

Also a non-related question:

* Have many of you taken your car over to London? I think I will be living in Wapping, so would you recommend having the car handy on the weekend like it is here at home?

Cheers in advance

lima

Hi there,

I am Irish and currently contracting in London.. I am using a UK Umbrella company, since I get paid in Sterling.. That said, my contract is meant to be up at the end of the year (2 weeks!!), but if it gets extended, I may look into setting up a company. Now the thing is, I am not sure as to whether to set up a company in Ireland or UK.. since I'm thinking that it would be more efficient in Ireland as you can pay the Irish corporation tax rate..

I don't see the benefit of using an Irish umbrella company whilst working in UK.. being Irish, I'd imagine they'd be more expensive than the £15/£20 a week you pay to a UK umbrella company..

I use one called 360.. they are all automated online but their staff are a bit cr*p at replying to emails/phone callls

hope this helps..

Fratton Fred

Did you set up a company? I would be interested in hearing how you got on.

lima

I myself didn't, I got my extension for another 3 months, and I plan on leaving UK after that so I'm just continuing to use the UK Umbrella Co until then... it's quite handy as everything is done via their web portal

the_god_swan

I'm actually on the ferry right now to begin the next stage of my life : ) Note they have wifi on the ferry... nice!!

I was contracting in Dublin and using an Umbrella company owned and maintained by CXC in Cork. When I told CXC that I was moving to the UK they were eager to keep my business and told me that because many people are moving over that they now have UK Management and Umbrella companies. All completely UK registered and UK tax paying. I am also moving over long term, for a couple of years at least.

My options were :
* Continue using my Irish Umbrella company (this is not a long term option because you can legally only do/use this for up to 3 months, its meant for short term oversea contracts)

* Join one of there UK Umbrella companies (I will be earning more in the UK than I was in Dublin so I do not believe this is the more efficient choice)

* Join one of their UK Management companies; this is what I chose. Like I said its 100% UK registered and Tax paying. The finances just happen to be calculated in Ireland. I have more freedom with regards to what I can claim as expenses on this option compared to the Umbrella.

In the end I did not have to do much research, CXC had nearly all the details I was after and I have been happy using them up till now. Using CXC templates of both UK and Ireland Management companies, I compared my final cash outcome after all taxes and charges and I was up more cash (200 euro p/m) using the UK system.

Note the monthly fee for an Umbrella company is 125 pounds or 5% of net month pay.
And for a management it is 250 pounds. I was initially concerned about the doubling of my monthly fee, but with lots more freedom with expenses (ie. buying company pc's etc) I decided to except.

I hope this helps

lima

the_god_swan are you saying you pay £250 a month?? I pay about £80 in total a month for an umbrella company which I can put in as an expense... works out at about £55 a month after that..


What is a management company out of interest? what's the difference between one and an umbrella company? what else do they do to justify chargin £250 per month?



ps it's Accept not 'except'!!!

srsly78

Umbrella companies are merely parasites. You do not need their "professional services" to manage a 1 man company.

Here is my "compleat idiuts guide to IT contracting thru Irish LTD company".

To setup an Irish Limited Company will cost you e100 through a formations agent (use an agent, dont try to do it yourself, you wont save money or time). A quick google will find you a company formation agent, I won't link one here lest I be accused of pimping.

Once you have the company setup you will want to register for VAT (not worth contracting unless you gonna do > e35k anyway). Then register for ROS. Now, using www.ros.ie, register yourself (use your pps number) as an employee of your own company. Almost done... Oh, get that funky excel payroll spreadsheet, choose your salary (just what you need, leave as much profits in the company as possible). Get yourself a company bank account. I'm with BoI, and lets just say their online stuff overwhelms me (and I'm a c++ programmer lol). Dunno who has better online stuff.

Every month:
Do your payroll, go to ros and file a P30. They changed this to every 3 months for 2011 I think?

Every 2 months:
File a VAT things on ros. Note VAT doesn't apply to exports to UK for example.

End of tax year:
File a P35, shows total prsi+paye paid for all employees.

Advantages:
You should be able to avail of company profits tax-free for 3 years (sorry don't have link to hand).
Give yourself an executive pension just like Seany and the lads wahey \o/
Claim overnight subsistence allowance of e109 when in London.
Claim travel expenses.
Buy fsckloads of IT gear, and write off depreciation on it.

Disadvantages:
If you don't know where to start it can be daunting, but hey this poast just remedied that amirite?

NOTE: The 183 day rule applies. Once you are in UK for 6 months you gotta pay UK tax. HOWEVER.... You can put yourself on "secondment" for up to a 2 year contract!!! Then pay yourself what you need to live on in London, and leave rest of money in company back in Ireland.
this -> http://www.hmrc.gov.uk/manuals/eimanual/eim77010.htm, refer to example 5 regarding Irish IT employee living in London.

I spend 1/4 of my time in London working, but am about to move over fulltime in the near future it seems.

lima

srsly78 wrote: »

Umbrella companies are merely parasites. You do not need their "professional services" to manage a 1 man company.

Here is my "compleat idiuts guide to IT contracting thru Irish LTD company".

To setup an Irish Limited Company will cost you e100 through a formations agent (use an agent, dont try to do it yourself, you wont save money or time). A quick google will find you a company formation agent, I won't link one here lest I be accused of pimping.

Once you have the company setup you will want to register for VAT (not worth contracting unless you gonna do > e35k anyway). Then register for ROS. Now, using www.ros.ie, register yourself (use your pps number) as an employee of your own company. Almost done... Oh, get that funky excel payroll spreadsheet, choose your salary (just what you need, leave as much profits in the company as possible). Get yourself a company bank account. I'm with BoI, and lets just say their online stuff overwhelms me (and I'm a c++ programmer lol). Dunno who has better online stuff.

Every month:
Do your payroll, go to ros and file a P30. They changed this to every 3 months for 2011 I think?

Every 2 months:
File a VAT things on ros. Note VAT doesn't apply to exports to UK for example.

End of tax year:
File a P35, shows total prsi+paye paid for all employees.

Advantages:
You should be able to avail of company profits tax-free for 3 years (sorry don't have link to hand).
Give yourself an executive pension just like Seany and the lads wahey \o/
Claim overnight subsistence allowance of e109 when in London.
Claim travel expenses.
Buy fsckloads of IT gear, and write off depreciation on it.

Disadvantages:
If you don't know where to start it can be daunting, but hey this poast just remedied that amirite?

NOTE: The 183 day rule applies. Once you are in UK for 6 months you gotta pay UK tax. HOWEVER.... You can put yourself on "secondment" for up to a 2 year contract!!! Then pay yourself what you need to live on in London, and leave rest of money in company back in Ireland.
this -> http://www.hmrc.gov.uk/manuals/eimanual/eim77010.htm, refer to example 5 regarding Irish IT employee living in London.

I spend 1/4 of my time in London working, but am about to move over fulltime in the near future it seems.

This is great info thanks!

However I've been contracting in London for 3 months since Oct, and now I have another 3 months with possibly another 3 after that... is it worth setting up a company for that amount of time in your opinion? I'm so lazy and if you count expenses etc. it turns out I'm paying about 25% tax on a £XXX per day rate, so to me I'm happy using them... however if you tell me that I could pay a lot less tax then let me know!!!

srsly78

I used an umbrella when I was working in the UK before (parasol). I am much more tax efficient with my own company now (mainly because of pension). Profits are tax-free for 3 years with your own Irish startup company, how efficient is that? In the UK the system is totally different, they use dividends to efficiently get money out of companies.

Also, when dealing with umbrellas I found it annoying to always have to mail them receipts etc etc. I just claim whatever I want now, and try to do everything online (I flag stuff as "receipt" in gmail).

But hey I'm not an accountant or an actuary so don't ask me complicated stuff like that

edit: I left out more EOY stuff in that above post btw. You have to return annual accounts (except for 1st year). HOWEVER they changed the law a few years back and new companies below a certain size are automatically audit-exempt. So you do not have to pay loads of money to an auditor. WARNING: You lose the exemption if you don't keep your nose clean by filing all relevant stuff on time, luckily ros reminds you

IamtheWalrus

Hi all,

I am currently working in IT in London on a full time contract. I am eager to move to contracting and was wondering if any of you have any advice.

Is it difficult to get into contracting with no contract experience (just 5 years development full time contract)?

If there is contract work out there?

How much notice would I have to give my current job, like would I have to start asap for contracting?

srsly78

Contracting is about selling yourself as much as it's about technical ability. 5 years experience is pretty junior unfortunately, depends how relevant it is. Certain easier stuff is very common, like c# or web stuff. Can you manage a team etc as well? Are you proficient in multiple areas?

Regarding notice etc, it should say how long in your contract. There is loads of contract work out there, but they can fire contractors very easily remember.

daithi2011

You would be mad to use an umbrella company or start a UK company. The UK tax system works against the contractor.
The best setup is this

Get your own limited company in Ireland. Make sure you have a place to live over here.
Then get contracts in London.

Talk to an accountant and they will explain this stuff to you.

Some of the advantages are
- Higher wages in London for IT
- Loads of jobs in IT
- Lower tax rates in Ireland
- Subsistence (huge over €100 a day into your pocket tax free, take out accommodation etc and you'll still be left with loads, and thats before you pay yourself)
- Buying tech stuff for the company
- Flights can be expensed, Ferries, Car etc
- Bring your car over and get mileage too

Then you come back to Ireland every couple of weeks. Do a bit of work here, even a day, even if you have to hand the money to someone to enable them to pay it to you for the days work. Now you are employed in both countries. Ask your accountant about what this does for you.

I used to do 6 months in London and then sit on my arse for 6 months. Only stopped when kids came.

www.jobserve.co.uk

Go to power search and limit the search to only over €40 per hour jobs
You should be pocketing €10k plus a month after tax for most decent IT jobs

lima

daithi2011 wrote: »

You would be mad to use an umbrella company or start a UK company. The UK tax system works against the contractor.
The best setup is this

Get your own limited company in Ireland. Make sure you have a place to live over here.
Then get contracts in London.

Talk to an accountant and they will explain this stuff to you.

Some of the advantages are
- Higher wages in London for IT
- Loads of jobs in IT
- Lower tax rates in Ireland
- Subsistence (huge over €100 a day into your pocket tax free, take out accommodation etc and you'll still be left with loads, and thats before you pay yourself)
- Buying tech stuff for the company
- Flights can be expensed, Ferries, Car etc
- Bring your car over and get mileage too

Then you come back to Ireland every couple of weeks. Do a bit of work here, even a day, even if you have to hand the money to someone to enable them to pay it to you for the days work. Now you are employed in both countries. Ask your accountant about what this does for you.

I used to do 6 months in London and then sit on my arse for 6 months. Only stopped when kids came.

www.jobserve.co.uk

Go to power search and limit the search to only over €40 per hour jobs
You should be pocketing €10k plus a month after tax for most decent IT jobs

for a start an accountant will charge for speaking to him correct?

Please explain why you think a UK umbrella Co or UK company works against a contractor... I'm doing very well here....

What if you have been contracting in London for 3 moths already using an umbrella co, is it easy to just switch to using an Irish company that you set up?

Regarding all those expenses you mentioned, I can claim them all through my umbrella co in uk, inlcuding rent and travel.. the only benefit would be the 'tax free profits for 3 years' as per a previous post.. plus currency exchange would cost... is it really worth it? I'm coming out with 80%-ish after tax..

srsly78

Yes it's really worth it. Noone is gonna post their complete accounts here to convince you tho I used both as said earlier. Just setup your own company, if you are IT contractor you should be well able for it.
You don't need an accountant, I just explained everything above. Most accountants will give you free advice to try and get chance to do your EoY books. Trust me, I am MUCH lazier than you are Also, 20% = DOING IT WRONG.

Also: IR35. If you don't know what this is then you seriously need to do your homework.

@Daithi: You seemed to have missed the trick with "secondment", check it out.

Regarding the umbrellas, even with them you gotta fill out loads of forms, record expenses etc. THey save you no work at all! There are actually less steps involved doing it yourself (no mailing **** off and waiting etc).

lima

cheers lads I'm going to have to look into this properly!

only thing is, I just signed a contract thing to use the umbrella company for another 3 months... crap!

daithi2011

lima wrote: »

for a start an accountant will charge for speaking to him correct?

Please explain why you think a UK umbrella Co or UK company works against a contractor... I'm doing very well here....

What if you have been contracting in London for 3 moths already using an umbrella co, is it easy to just switch to using an Irish company that you set up?

Regarding all those expenses you mentioned, I can claim them all through my umbrella co in uk, inlcuding rent and travel.. the only benefit would be the 'tax free profits for 3 years' as per a previous post.. plus currency exchange would cost... is it really worth it? I'm coming out with 80%-ish after tax..

True, an accountant might charge you to speak to him. But if he does, then he works for you. He is giving you advice you are paying for, and not just getting as hearsay on the internet.
You dont need an accountant for your company, but I found it made things easier for me. I went without one for years, but it was a hassle tbh. It was much easier to pay the money (deductable) for him. Shop around too. Their prices vary hugely.

Go get some proper advice from an accountant. And if you want to be doubly sure talk to an accountant in the UK and one in Ireland.

There are numerous tips and tricks. We cant go into all of them here as there are so many. Others you dont want revenue closing the loophole either after they read about it here (though these days if they close the loop holes they are probably forcing people to move their companies and would lose out themselves.)

Im not going to go into things in detail. I'll just say that I bet my years earnings that you will have flushed tens of thousands down the drain in a few years through your umbrella company. Its easy to leave the umbrella company. Just decide if you want Irish or UK company - definitely talk to an accountant about this, even if you dont plan on keeping them. And then tell the umbrella you no longer need their services. Watch them cut their fees by minimum of 50% the minute you mention this But even then you are still better off going the Irish route.

As the previous poster mentioned, IR35 is the big bitch in the UK. That alone is enough to make it well worth while setting up your Irish company. It can be gotten around but you definitely need a UK accountant than and its loads of hassle too.

I just read about your contract with the umbrella company there.
Just ring them Monday and tell them you are going your own way after this contract is up 3 month as they are too expensive. Tell them out straight to drop their prices TODAY if they want to convince you they are value for money. They wont want you even looking into your own route, so they'll deal. Stress that you want the reduction immediately. Then leave anyway at the end of the 3 months.

MrPudding

I am surprised that people are working in the UK through an Irish LTD company. I have been here for over four years now, any agency I have spoken to insists on a UK company. I would check with the agency or company you will be contracting with to make sure they allow it. If they are happy to contract with a foreign company you would probably be better to go for a fully off-shored service.

I got a recommendation from my Irish accountant for a UK accountant. he set everything up for me, company wise, free of charge. I pay them £136 per month for my UK LTD company accounts, which is not bad.

I would not use an umbrella company, particularly one that charges a percentage. They don't have any more work to do just because a contractor earns more money.

MrP

MrPudding

Oh, and check out this lot:

http://www.pcg.org.uk/cms/index.php

MrP

srsly78

Yeah some agencies can be difficult, good to bypass them if possible and apply direct, it's all about who you know

There is no legal reason why anyone cannot contract through an Irish company, it's just agencies not wanting to have to pay in euros etc. It actually makes life easier having Irish company, since you don't charge VAT on exports.

MrPudding

srsly78 wrote: »

Yeah some agencies can be difficult, good to bypass them if possible and apply direct, it's all about who you know

There is no legal reason why anyone cannot contract through an Irish company, it's just agencies not wanting to have to pay in euros etc. It actually makes life easier having Irish company, since you don't charge VAT on exports.

If you can go direct then great. But, taking the place I am in, which is a large Bank, they will only deal through agencies.

MrP

daithi2011

MrPudding wrote: »

If you can go direct then great. But, taking the place I am in, which is a large Bank, they will only deal through agencies.

MrP

I never had an agency refuse to deal with me because I had an Irish company.
When you contact them make it clear and tell them you'll just apply for the job via another agency who will deal with you.

MrPudding

daithi2011 wrote: »

I never had an agency refuse to deal with me because I had an Irish company.
When you contact them make it clear and tell them you'll just apply for the job via another agency who will deal with you.

So why don't you go fully offshore? You have to use a specialist umbrella company, the the fees are more than covered by the reduction in payable tax. This is originally what I wanted to do, but ran up against the UK companies only issue.

MrP

daithi2011

MrPudding wrote: »

So why don't you go fully offshore? You have to use a specialist umbrella company, the the fees are more than covered by the reduction in payable tax. This is originally what I wanted to do, but ran up against the UK companies only issue.

MrP

Offshore doesnt work for me. Looked into it.


But as far as the companies wanting to only deal with British companies is concerned.

Going through an agency.
You invoice the agency. They invoice the client. The client doesnt care where your company is from. The agency wont care either. Why would they throw away a money making contractor?

Going direct.
The client most likely pays companies in every country for different work. They can pay you in sterling if they want no matter where your company is based. If they for some unknown reason dont want to trade with an Irish company, there are thousands more who will trade.

MrPudding

daithi2011 wrote: »

But as far as the companies wanting to only deal with British companies is concerned.

Going through an agency.
You invoice the agency. They invoice the client. The client doesnt care where your company is from. The agency wont care either. Why would they throw away a money making contractor?

Going direct.
The client most likely pays companies in every country for different work. They can pay you in sterling if they want no matter where your company is based. If they for some unknown reason dont want to trade with an Irish company, there are thousands more who will trade.

I am sure this is the case in some places and with some agencies, but it simply isn't with where I am.

The company where I an currently working operate a preferred supplier programme. With respect to contractor recruitment, this means there are four agency from who they will accept CV's for positions. Additionally, they do not work with contractor on an individual basis, only through one of the four preferred supplier agencies.

With respect to the agency, the one I am operating through at the moment will only deal with UK companies. Clearly they are perfectly within their rights to do this, and at the end of the day, if I am not happy with that they are likely to be able to find someone who is who is also acceptable to the client.

When I change to another job I will investigate the offshore thing again, until then it is a UK company.

MrP

daithi2011

Fair enough.
So its your choice then to deal with people who insist on you having a UK company.

As I said. Anyone who wants to use an Irish company have plenty of options to choose from in who they deal with. They will not have a problem using their Irish company in the UK. If they do, they just go to the many companies/agencies who will deal with them.

shaggy28

Hey Guys. I worked as a contractor in the UK last year from Apr to Sept with my own company set up in the UK. I paid corporate tax to HMRC for 2010 and obviously would have paid myself a dividend (less expenses). That dividend is then declared in the UK for my personal tax returns in the UK, but I will not have to pay any tax on it as it is under £37,000 for the six months. THe question is, how do I treat that here in Ireland when filing my 2010 returns...do i need to declare it, it has already been declared in the UK? if i declare it in ireland i will have pay tax on it even though in the UK I didnt? I'm not sure how to treat it.
Thanks.

Svetti Arss

Have been offered a well-paid 1 month contract in London. I have an vat registered Irish company but the UK agency advertising the job says it can only make payment to a UK registered company. There are a few UK companies advertising the position so I think any agency could put me forward for this job.

Interested if anyone on here knows of a UK agency that I can invoice in euros (+ Irish Vat) or am I just better off using one of the UK umbrella companies already mentioned?

Thanks..

srsly78

Threaten to sue them for discrimination :pac: I send invoices from my Irish company direct to the customer, no stupid agencies involved, no problems.

You can go with an umbrella ofc, but then you have 2 parasites in the loop, the umbrella, and the agency. It's a contractors market right now, so stand your ground (unless you are really stuck for work).

Svetti Arss

srsly78 wrote: »

I send invoices from my Irish company direct to the customer, no stupid agencies involved, no problems.

Sometimes jobs are only advertised via agencies so its not always possible to avoid them. Did you invoice the customer in Euros + Irish vat?

srsly78

In euros yes, with vat excluded because we are both vat regd companies. It's kinda complicated, we agreed a fixed sterling exchange rate at the start. I bill them the euro equivalent of this, they pay me sterling equivalent into sterling bank account. Then I wait for good rate before sending money home. Made about £3k extra off FX last year (rate has moved in my favour).

When I started off I had the same problem you guys have, dealing with agencies etc. Now I'm more established/connected so I can go direct, being a specialist doesn't hurt either. Also being incredibly lucky is a big factor

asherbassad

Right lads,

I'm completely lost with all this umbrella this/offshore that yada yada.
I started a contract last August (moved back to Ireland from abroad). Basically I have a payroll company do my monthly income and that's it. But I'm startled at what I lose.
On a E400 a day rate, say 8000 a month, I probably take home about 4600. I'm losing nearly half.
Also last year my contract was from august to december...I was definitely in the country and in the contract for less than 180 days. Can I do something about that?
I haven't filed a tax return yet for last year but my payroll company (CXC) are at me to get it done through them. I'm just thinking that they will just do something basic and I won't get a dime back.

Any thoughts?