IT Contracting in London questions

kman

Hi

I am considering doing some contract IT work in London, for a minimum of 3 months, but it could be up to a year, or even longer if it was worth it.
Is it best to set up a Limited co. here and bill and pay everything through it, or set up a UK company. I am currently a permy employee in dublin so any hints/tips/pointers etc on making the move would be greatly appreciated !

kman

MrPudding

It depends on how you get your work.

I was looking at a couple of contract in London. None of them would work through an Irish or Off shore company. I was going to have to setup a UK company.

The good news is that, depending on who you go through, there is no charge to set up the limited company and it can be done in one day. As opposed to here where it takes about 2 weeks and can cost several hundred euros.

So, I think you first step needs to be to find out if the companies you might be working for will go through an Irish company. If they will then you might be better off going through an offshore company which will allow you to have a portion of you earning completely tax free.

If not then you will have to setup a UK company.

Chris

kman

thanks for the info.
kman

Tweedledum

I've lived contracted in London for the last 11 years. It is not free to set up a company - even Companies House will charge you a (small) registration fee, and unless you want to go through names searches yourself which takes time, you are better off buying an off-the-shelf company for about £100.
Agencies in the UK are very wary of foreign / offshore registered companies for contractors, and the Revenue get VERY interested when they hear about it happening. It is a strong pointer to tax evasion...
As for getting things tax-free earnings by using an offshore company - while you may pay less tax, you won't get any tax free. The Irish revenue stopped the remittance basis of taxation, which was a big tax avoidance measure for people working overseas for a few years. Also, a 3 month contract would mean that you'd be still classed as resident in Ireland, so you may be subject to Irish taxation unless you stayed in the UK for a lot longer.
Still, the IT market is quite good at the moment, so London rates should keep you relatively happy regardless of the tax regime. (Remember to talk to an accountant to avoid IR35 and 660a taxation measures too.)

Paradoxically, I'm moving back to Ireland this year - and I don't know what the hell to expect when I do. Probably a life of penury and destitution as I don't expect the contract market for developers with financial/asset management experience would be too high in the West of Ireland. Oh well.

MrPudding

The accountancy company I was going to use do not charge for setting up the company. I know there is a charge to do it but they don't pass it on, directly.

As for the offshore thing. I am not 100% on this stuff but it was mentioned to me by a reputable source. In order for it to work you need to be working / resident for tax in one state but domicilled in another state. In my case, for example, if I was contracting in Ireland and the agency would work with an off-shore company I would be able to do this. As I am from NI I am domicilled there. I would get paid a small salary here which would be taxed as normal. Then every quarter i would be paid a dividend. This would be paid into an account in NI. As long as that money is not brought into Ireland then no tax would be paid on it.

That is how it was explained to me. I am not sure how the recent changes in the budget would effect it but in the case of the OP it is not relevent as he will be paying tax in the UK.

He may be able to do it or may not. My advise would be for him to speak to an accountant over there. There is no point in paying anymore tak than you have to.

MrP

MrPudding

Tweedledum wrote:

Paradoxically, I'm moving back to Ireland this year - and I don't know what the hell to expect when I do. Probably a life of penury and destitution as I don't expect the contract market for developers with financial/asset management experience would be too high in the West of Ireland. Oh well.

Sorry, I meant to ask, why are you moving back? I am not sure I would be able to stick London for long myself. At the same time though, there is good money on offer.

MrP

Tweedledum

We're moving back for the good weather! ;-)

Actually, it was a difficult decision to move back. We have 2 small children and would prefer them to grow up somewhere not so big as London. We also want to be closer to family and friends, as lots of people seem to spend a few years in London and then move on again. There is a very high turnover of people - none of the people I knew in London 10 years ago are still here. Nowhere in Ireland can possibly compete with London earnings-wise, and the property price/earnings ratio isn't as bad as say, Dublin. I also realise that

Ireland has changed an awful lot since I left (when this supposed Celtic Tiger was only starting). When I was last back at Christmas I was surprise at the number of Polish voices I heard - you expect a wide mix of people in London, but when I was in college in the late 80's the only visibly (or audibly)non-Irish were foreign medical and engineering students. I don't have this nostalgic view of the "old country" or anything - I know Ireland has higher per-capita crime, road-deaths rates, public corruption, relatively awful SAD-inducing weather, poor (although improving) infrastructure, and a lot more. This is partly why the decision to move back was so hard...

If it doesn't work out in Ireland as well as we hoped, we may just come back here again after a year or two!

Cheers,