Self Employeed and Contracting Work

[Paul2012]

Hi,

I am considering starting up my own I.T business, but in my current employment contract it says I shouldn't work for / start any of my own business while currently being employed by them.

I am considering that in order to get started to go for daily rate contracting jobs, for example £300 per day for 3 months etc. I have found these contracts on sites like reed and other recruitment sites.

My question is, do the recruitment agencies on there, employ you as a member of there staff, employ you on a self employed basis, or could I form a Ltd company, become an employee of that business and then my limited company offer it's contacting services (e.g Me) out to recruitment agencies, is this something that recruitment agencies do?

I have got a meeting with an accountant on this coming Monday, but wanted to see if anyone has any experience of this, so I can discuss with the accountant on Monday.

Many thanks, Paul

 

[Scalloway]

If you are going to be working for a business you would need to be an employee, HMRC do not like people to be self employed and working solely for a single business - the employer will save himself Employer's NI if it was possible.

If you are going to be doing this on your own account you must form a limited company. However it still may not save you tax. You should read this article on a measure called IR35.

http://www.nasaconsulting.com/ir35/a-guide-to-ir35.aspx

 

[Paul2012]

My question was more around, for temporary contracting work would an recruitment agency pay a limited company, instead of employing me directly?

So my company invoice the £350 to the recruitment agency, then my company pay me a salary, the rest would sit in the business bank account.

My goal isn't be as tax efficient as possible (within the first year operating), but to set up a company that isn't a conflict of interest with that of my current employer (12 month clause in my contract), but using contracting as a way to get some money into a business while still paying myself enough wage top get by with.

So after 12 months I can then start to compete in the same industry as my current employer, then my customers would be dealing with a company that is at least 1 year old with some cash in bank, as opposed to quitting my job and jumping straight into a limited company with no work etc, I can then spend the year (while contracting) trying to gain business.

Many thanks
Paul