contracting

[Neil P]

Hi all, I've been employed at a county council for 15 years, and if I don't change job soon I will go mad. I have been thinking this since year 1, but you just get stuck in a (looooooong rut).

I could probably get a job as a consultant, but do worry that I am under-skilled/overpaid having been working somewhere with low standards, and no apparent process for getting rid of dead wood.

So my question is .... has anyone switched to consulting? What are the pros and cons? Anyone moved from local government? How was the transition?

Also re IR35 - what is it? Why is a job "outside of IR35" a good thing?

 

[JTC]

IR35 deems you as effectively an employee, so despite (possible) intentions to operate as a legitimate business, you will be taxed on basically the same terms as an employee, without the ability to manage the financial affairs of your limited company as you - as director - see fit. I also don't think that you qualify for any employee benefits, which may be a deal breaker also (i.e. no sick pay, holiday pay, pension) but this may have changed since I last contracted (outside IR35) about eight years ago.

I wouldn't consider an 'in IR35' contract unless it was for serious money and you were happy to be treated as a pseudo employee of your client.

I'm sure someone will be along shortly to explain it properly, I may have made a hash of that ^^^

 

[vacuum_tubes]

Ignore what anyone says about IR35 and go to an IR35 insurance company or expert. They will review your contract and tell you if it needs to be changed as part of their policy.

I would very very very strongly recommend taking out IR35 insurance with the contract check.

Why? because I've been fighting a £40,000 IR35 fine for 2 years and have lost, luckily I have IR35 insurance which covers the bulk of it but still have to cough up around £10k excess

 

[Mick P]

Hi all, I've been employed at a county council for 15 years, and if I don't change job soon I will go mad. I have been thinking this since year 1, but you just get stuck in a (looooooong rut).

I could probably get a job as a consultant, but do worry that I am under-skilled/overpaid having been working somewhere with low standards, and no apparent process for getting rid of dead wood.

So my question is .... has anyone switched to consulting? What are the pros and cons? Anyone moved from local government? How was the transition?

Also re IR35 - what is it? Why is a job "outside of IR35" a good thing?

Yes I did and made a bloody fortune but it is risky as you are going from day to day. I took an early retirement package from the Royal Mail at the age of 55 with the intention of spending the rest of my life pruning my roses but boredom and guilt set in. I therefore decided to contract, registered with 3 agencies, told them that I was a corporate whore and would sell myself to the highest bidder in placing energy supply and PFI contracts and I would take a share of the first year savings that I could negotiate. Both of these were specialised purchases so I was in the right market. I stayed on PAYE to keep things easy and went on the company payroll on a running week contract as that is the one that pays better.

The clients paid a lot of money but expected results, so it was long hours and tight deadlines and by the age of 61 I was beginning to feel the wear and tear so I packed it in at the age of 61. One disadvantage was that demand was so great, I only took 2 weeks holiday in 2 years but it left me knackered.

Overall it was the best move I ever made.

The council will hopefully provide you with a good pension if they retire you off, don't be a mug and resign as only plonkers do that. Your length of service is a valuable asset so cash in on it.

 

[stevec67]

Hi all, I've been employed at a county council for 15 years, and if I don't change job soon I will go mad. I have been thinking this since year 1, but you just get stuck in a (looooooong rut).

I could probably get a job as a consultant, but do worry that I am under-skilled/overpaid having been working somewhere with low standards, and no apparent process for getting rid of dead wood.

So my question is .... has anyone switched to consulting? What are the pros and cons? Anyone moved from local government? How was the transition?

Also re IR35 - what is it? Why is a job "outside of IR35" a good thing?

Do it, if you can manage your personal finances. I did, and I earn twice as much as before, with less responsibility, less stress, and with longer breaks in between.
Don't do it if you absolutely need a salary of £X every month without fail.
IR35 is a tax rule as JTC says.
If you are "inside IR35" then you are treated as an employee. You pay PAYE as an employee, and you need to pay NI as an employee and you pay your own employers' NI as well. In addition it makes you an employee for the whole tax year so you can't then pay yourself on an ad hoc basis from your own company, you have to be monthly paid by that as well, on the payroll, again paying PAYE and NI and get no directors' bonus, if you are a limited company. If you have multiple contracts in a year, IR35 is a pig and it will cost you a fortune. I've done it once, I put my day rate up by £50 a day and it still didn't cover the losses. It also screwed up my payments from my own Ltd Co, it starved my company of revenue and limited my ability to put money in my pension and so avoid tax, it was a nightmare. There are online calculators showing you how much IR35 will cost you in your own circumstances.
Outside IR35 you decide your own pay and bonuses, you pay a single tax bill at the end of the year. If you have a good year, you can keep it in the company (if Ltd Co) or pay yourself salary and pay tax accordingly. If you have a bad year, you can average it with the good years. Basically you are in charge and you can manage your own payment affairs, legally, pay yourself only what you need to be paid, and pay tax accordingly. You can also legally employ your wife, if you have one, and use her tax allowance if she doesn't already use it by working. You can also pay her NI so that she has a pension from the state at retirement age and doesn't depend upon you. This last is important because you may not be around for ever.

 

[Rcook]

Local government is sould destroying - started my working life there. Good for getting a grounding, but not easy to progress.

My transition from local government was via a couple of well-known companies - left council, worked in private sector for three years and was 'constructively dismissed', got another job and was made redundant after two years.

So contracting was next for a year, followed by two and a bit years as a permy, then back to contracting for four years.

It depends what field of work you are in, but essentially, firstly you would need to set up a limited company, and VAT register it - you can buy them off the shelf, or you can get an accountant to do it for you (top tip: Get a good accountant). Most contract work is done via agencies - you will sign a contract between your company, the agency, and the company you will be doing the work for with working hours, your hourly/daily rate.

You (your company) will then invoice the agency on a weekly or monthly basis

It can be a bit daunting at first, but it settles down quickly.

Good luck - you won't regret leaving public service

 

[Tony L]

Hi all, I've been employed at a county council for 15 years, and if I don't change job soon I will go mad. I have been thinking this since year 1, but you just get stuck in a (looooooong rut).

If you have a skillset that is in demand and are fairly free financially I’d highly recommend contracting.

It needs to be pointed out I have always utterly detested the corporate rat-race and have never actually worked anywhere for longer than 18 months as a “permanent“ job. I always got bored after 6 months or so, often after six minutes, but stayed far too long beyond that. I have always hated being in those environments (I am far happier in the arts and counterculture). I was only ever there for the money and couldn’t wait to get out the door come 5:00pm. Thankfully at the age of 60 this has only actually represented/wasted about 4-5 years of my life. For the rest I was doing other things.

As such contracting was a really, really good move for me as the pay was vastly better and I didn’t need to get involved with the idiocy and tedium of office politics or internal career structures. I just went in, sorted out whatever the IT particular IT catastrophe I was being paid to deal with, then usually interviewed and trained the next guy, and moved on. I liked six month contracts; one or two months to sort the real shit out and put something reliable in place, two months getting paid to play a load to play Quake and shop on Amazon whilst I made sure what I’d done was rock solid, and two months to do that some more whilst training the next guy. Then two months off enjoying myself buying records and cycling around That London, then find the next contract. The timings often didn’t work out quite like that, I was in one place for well over a year (a lot of Quake was played), others only two to six weeks.

The problem for me is it ended fairly abruptly post Y2K despite pre-empting that date-rollover only being a very small part of what I did. Basically the skillset demand changed as the market became flooded with freshly graduated computer science students and companies tended to prefer two or three of them to one of me. I wasn’t prepared to take a pay cut, or work any harder so I got out.

The obvious issue with contracting is the lack of any financial stability. This wasn’t as bad as it sounds for me as I was used to it from the mass unemployment of the 1980s. I’ve always understood buffers, always been able to survive the lean times, but I have consciously avoided debt and responsibility. It has been a life strategy. I’m not sure I’d want to go contracting with a load of debt or family responsibilities.

PS I don’t know if it is relevant or not, but my IT contracting years were in my late-20s to mid-30s. I semi-retired at age 39 and have been running pfm ever since. The longest “job” I have had by several orders of magnitude!

 

[stevec67]

Oh, the other benefit of contracting is that *you are in charge*. Nobody tells me what to do. I am working with a client, for their best interests and mine, but they don't employ me so they don't tell me what to do. This is worth more than gold. I remember one client Managing Director who was engaged in a bit of minor law breaking. I told him about it, said that it was unacceptable, that I strongly advised against it and that if he chose to ignore my advice then he was doing it on his own, and that I didn't want any part of it. He started laying the law down. You will do this, you will do that. Excuse me, no I won't. I work with you, I am not your employee, I'm working in your best interests and mine as an employee of MY company. You don't tell me what to do. I'm here while I want to be and while you want me to be. When that changes, either way, it's notice time and then I'm done. In fact. If you want me out, we can agree that today, right now, and I'll get in my car. He opened his mouth to say "you don't mean that" and then shut it again, because he knew that I did and he needed me there the next day for an important customer visit.

 

[Tony L]

Exactly that! I viewed being blunt/not tolerating corporate idiots in board meetings as part of my skillset.