Limited Company UK

Gradcivil

Hi......A recruitment agency rang me during the week telling me about a position I would be interested in taking which is in London.

However, they said I would be paid on an hourly basis and would have to set up a limited company as I would basically be self employed. This kinda put me off the job as I would have hoped for a salary.

So, I just wondering has anyone any experience setting up a limited company in the UK? Is it difficult to set up? What are the advantages/disadvantages? Is this the normal procedure in UK?

Jack B. Badd

I haven't come across this but it sounds like they want a consultant rather than a FTE. Does the position have a contract period attached to it or is it open-ended?

Marcusm

If it's IT based, this has been pretty standard for 15 years or more. In fact there's been a whole load of litigation on whether it stands up PAYE wise (referred to as IR35 litigation). BAsically it can sale the employers on redundancy and pension payments as these effectively become their problem. PLus for employers whicha re sensitive to the number of employees they have, it permits massage of the figures. I imagione the agency would point you to the people who can assist in the corporate legal, accountancy and tax aspects for a fixed fee.

sudzs

You could use an umbrella company like these...

http://www.umbrellacompanies.org/umbrella-company-discounts/

You would be PAYE with the umbrella company taking a small fee each week to put you through the books, so to speak.

I know someone who used a company called Danbro for this and they had no probs.

n900guy

Gradcivil wrote: »

Hi......A recruitment agency rang me during the week telling me about a position I would be interested in taking which is in London.

However, they said I would be paid on an hourly basis and would have to set up a limited company as I would basically be self employed. This kinda put me off the job as I would have hoped for a salary.

So, I just wondering has anyone any experience setting up a limited company in the UK? Is it difficult to set up? What are the advantages/disadvantages? Is this the normal procedure in UK?

I have some experience with this. Unless it's short term work (e.g., weeks to a few months) it's not worth it IMO. Personal services companies (i.e., you are the company, sole employee etc., . ) are within IR35 so you pay a lot of extra fees like company accounting fees, employer national insurance and so on. Keepign within the IR35 guidelines and paying yourself normally, you keep around 60% of the gross quoted figure on the hourly rates once taxes are paid.

If you do everything "legit" with payign yourself PAYE salary and company taxes, you end up getting the same per hour as a normal employee but minus the holidays or other employee entitelments, which of course it's why it's so popular (with employers and recruitment agents).

endabob1

It's pretty standard for contract work.
I did it 10+ years ago in London for a while, there's very little hassle in setting up a Ltd company, you can buy a shelf company off the internet, have a quick google but I'm sure you'll find them on Gumtree or Ebay.
There are also a fair few places doing the paperwork for you for an admin fee, they are popular with the antipodeans in particular as they are normally in London for 2 years and prefer the flexibility of contracts
http://www.1stcontact.com/
In no way promoting them but they'd be a good example of what I'm talking about.

IR35 was brought in to try and deter the tax avoidance that was being used by contractors, using ltd companies to avoid paying PAYE and NI and instead paying corporation tax at a much lower level.