Getting into contracting?
Discussion
Appreciate there haven been similar post.....
I've been with the same company basically all my professional career, worked my way up the ladder from a graduate to a senior engineer. However things have became a bit stagnant over the last few years, basically more responsibility, more stress stress, without any progression or additional remuneration. I had my most recent appraisal and while it was excepted I'm doing well I was effectively told you've no chance of any progression. Not very motivating when there's people who work under me that are a higher grade because they got there years ago when we were far less of a commercial entity.
So I've been looking at moving on. I'm a chemical engineer by background, degrees and chartered. The role I do now is a Technical manager where I have the responsibility for the technical delivery of projects and also the project management aspects, managing the budget, writing bids etc. There seems to be a higher demand for PM's locally which I'd be happy doing-easier life TBH.
Problem is the benefits with my current job are pretty good, final salary pension (for now), 28.5 days leave a year through long service, plus bank holidays and an additional 13 days as we work a longer week than we're paid for. The work is interesting and varied however I've come to the conclusion the area I work in lack any kind of strong leadership so I can't see things improving anytime soon.
We've also just started a family but have never overstretched ourselves in terms of debt and would look to take out some income protection if I did make the leap. I guess what I'm looking for is experiences from others who've done similar and in particular from a similar field. Worst case I could always go back but would loose a lot of the fringe benefits which are no longer available to new employees.
I've been with the same company basically all my professional career, worked my way up the ladder from a graduate to a senior engineer. However things have became a bit stagnant over the last few years, basically more responsibility, more stress stress, without any progression or additional remuneration. I had my most recent appraisal and while it was excepted I'm doing well I was effectively told you've no chance of any progression. Not very motivating when there's people who work under me that are a higher grade because they got there years ago when we were far less of a commercial entity.
So I've been looking at moving on. I'm a chemical engineer by background, degrees and chartered. The role I do now is a Technical manager where I have the responsibility for the technical delivery of projects and also the project management aspects, managing the budget, writing bids etc. There seems to be a higher demand for PM's locally which I'd be happy doing-easier life TBH.
Problem is the benefits with my current job are pretty good, final salary pension (for now), 28.5 days leave a year through long service, plus bank holidays and an additional 13 days as we work a longer week than we're paid for. The work is interesting and varied however I've come to the conclusion the area I work in lack any kind of strong leadership so I can't see things improving anytime soon.
We've also just started a family but have never overstretched ourselves in terms of debt and would look to take out some income protection if I did make the leap. I guess what I'm looking for is experiences from others who've done similar and in particular from a similar field. Worst case I could always go back but would loose a lot of the fringe benefits which are no longer available to new employees.
Can’t help you in your field of work, but I made the jump to contracting (Financial) about 10 years ago, I've had about 7 different contracts and never been out of work for more than a month.
I love it, it suits me and my lifestyle well, contracting isn’t only different in pay and benefits, you are also your own boss, no 121's, no set work hours which makes life a lot more bearable.
I love it, it suits me and my lifestyle well, contracting isn’t only different in pay and benefits, you are also your own boss, no 121's, no set work hours which makes life a lot more bearable.
I've been contracting in finance for 3 years now, never out of work and currently doing 2 part time "emergency FC needed" roles at small companies that suddenly lost their fc and needed emergency help from someone that could pick it up with no handover
Very nice roles and I happen to earn nearly double what I would at a similar role as a perm
I won't be going back to perm
But I have to add that my wife earns good money in a stable job so I have the luxury of not needing stability
Very nice roles and I happen to earn nearly double what I would at a similar role as a perm
I won't be going back to perm
But I have to add that my wife earns good money in a stable job so I have the luxury of not needing stability
I was a contractor from 03 to 07.
Some things to note.
Tax. The situation changes regularly but for the majority LTD Co is the way to go. Avoid contracts with umbrella companies like the plague.
IR35 might be an issue in some contracts, esp if long term.
Insurance. Get some. Don't listen to others, get at least some level of basic protection.
VAT. You are probably going to want to register for VAT for various reasons.
Accountant. Find a good one, someone who is reliable and understands your needs. Expect to pay c.£1000 per year for CT600 and SA302 etc.
Business banking. You will want a business bank account, get that set up as quickly as you can as it can sometimes delay your first invoice which is never good.
Keep records. Lots of records.
Remember to adjust your daily / hourly rate for lack of holiday.
The moment you start a new contract keep looking for your next gig, in contracting it could last a few weeks, a few months, years but the danger time is in that first few weeks.
Read your contract very carefully. Esp when it comes to sickness.
Some things to note.
Tax. The situation changes regularly but for the majority LTD Co is the way to go. Avoid contracts with umbrella companies like the plague.
IR35 might be an issue in some contracts, esp if long term.
Insurance. Get some. Don't listen to others, get at least some level of basic protection.
VAT. You are probably going to want to register for VAT for various reasons.
Accountant. Find a good one, someone who is reliable and understands your needs. Expect to pay c.£1000 per year for CT600 and SA302 etc.
Business banking. You will want a business bank account, get that set up as quickly as you can as it can sometimes delay your first invoice which is never good.
Keep records. Lots of records.
Remember to adjust your daily / hourly rate for lack of holiday.
The moment you start a new contract keep looking for your next gig, in contracting it could last a few weeks, a few months, years but the danger time is in that first few weeks.
Read your contract very carefully. Esp when it comes to sickness.
Good advice on the thread already.
I normally caution friends who have worked long stints as a permie.
The reality of contracting is that you exchange job security and employment rights for money. You will have to get used to the idea that contracts can and do end prematurely and often without warning. Some bean counter decides to re-allocate funding, you're gone.
Your "job security" comes from your ability to get another contract.
If you can cope with this sort of lifestyle then go for it. But many friends and colleagues with long stints at a single company have lots of trouble with this aspect.
I normally caution friends who have worked long stints as a permie.
The reality of contracting is that you exchange job security and employment rights for money. You will have to get used to the idea that contracts can and do end prematurely and often without warning. Some bean counter decides to re-allocate funding, you're gone.
Your "job security" comes from your ability to get another contract.
If you can cope with this sort of lifestyle then go for it. But many friends and colleagues with long stints at a single company have lots of trouble with this aspect.
Hello, I'm an engineer too, although mechanical. I was at a company for 3 years, at the initial interview the promise of pay rises and promotion were discussed and I agreed to join. Three years later and still on the same grade and pay, performance was always good but the opportunities for promotion, due to the type of contracts and company, meant that I didn't get one. A chap started the same time as me to take over the manager's role, we didn't get on which impeded further, a lot, my chances for a rise, anyway long story. (He was an academic and had a very odd management manor, plus no practical skills, and a twit).
I had a call from a mate who asked if I wanted a change, engineering company on a construction site, only issue is it's a contract role. I jumped ship and x2.5 my salary, better work, huge projects and I feel valued. Also, the longer you work the more you get paid. I work 10 hours a day and have a short Friday so long weekends, I would hate to go back to my previous company, I feel invigorated.
Yes, running a limited company does encompass some paper work, keep receipts, but it's not difficult and certainly don't let that put you off.
Become a contractor!
I had a call from a mate who asked if I wanted a change, engineering company on a construction site, only issue is it's a contract role. I jumped ship and x2.5 my salary, better work, huge projects and I feel valued. Also, the longer you work the more you get paid. I work 10 hours a day and have a short Friday so long weekends, I would hate to go back to my previous company, I feel invigorated.
Yes, running a limited company does encompass some paper work, keep receipts, but it's not difficult and certainly don't let that put you off.
Become a contractor!
red_slr said:
I was a contractor from 03 to 07.
Some things to note.
Tax. The situation changes regularly but for the majority LTD Co is the way to go. Avoid contracts with umbrella companies like the plague.
IR35 might be an issue in some contracts, esp if long term.
Insurance. Get some. Don't listen to others, get at least some level of basic protection.
VAT. You are probably going to want to register for VAT for various reasons.
Accountant. Find a good one, someone who is reliable and understands your needs. Expect to pay c.£1000 per year for CT600 and SA302 etc.
Business banking. You will want a business bank account, get that set up as quickly as you can as it can sometimes delay your first invoice which is never good.
Keep records. Lots of records.
Remember to adjust your daily / hourly rate for lack of holiday.
The moment you start a new contract keep looking for your next gig, in contracting it could last a few weeks, a few months, years but the danger time is in that first few weeks.
Read your contract very carefully. Esp when it comes to sickness.
All very good advice.....Some things to note.
Tax. The situation changes regularly but for the majority LTD Co is the way to go. Avoid contracts with umbrella companies like the plague.
IR35 might be an issue in some contracts, esp if long term.
Insurance. Get some. Don't listen to others, get at least some level of basic protection.
VAT. You are probably going to want to register for VAT for various reasons.
Accountant. Find a good one, someone who is reliable and understands your needs. Expect to pay c.£1000 per year for CT600 and SA302 etc.
Business banking. You will want a business bank account, get that set up as quickly as you can as it can sometimes delay your first invoice which is never good.
Keep records. Lots of records.
Remember to adjust your daily / hourly rate for lack of holiday.
The moment you start a new contract keep looking for your next gig, in contracting it could last a few weeks, a few months, years but the danger time is in that first few weeks.
Read your contract very carefully. Esp when it comes to sickness.
I can’t add much more to this except, that if you do go contracting, try not to increase your spending to your new found levels of take home pay- it’s usually 2x as much. Keep it at the same level and just save the rest. If needs must, then obviously spend some. As stated above, you really don’t know when it’s going to be “pack your things up at the end of the week please”.
I have just had 3.5 months out, 6 weeks of which were down to me just enjoying faffing around at home, and another 4 weeks waiting for the paperwork for the current role to come through.
In four years of contracting I have saved up enough to go a full year without working, and that’s without economising in any way. With some economies, I could make it to 18 months…
As I was told by a contractor in my first 4 weeks as a graduate trainee “job satisfaction doesn’t pay your gas bill”
zippy3x said:
Your "job security" comes from your ability to get another contract.
True, The worst situation I found myself in was on day 1 of a new contract. I was working 200 miles from home for 12 months and was offered a job on a new contract 10 miles from home, slightly less daily rate (about 20 quid) but was worth it for being at home. The client wanted me specifically as it was the same client just a different region. It all sounded great.
Walked into the office on day 1, team meeting at 10am. Everyone in the room, boss walks in. OK so the following people are going to have to go to XYZ office (300 miles away) as this project is over staffed. Read out list of names... my name was on the list.
They had shafted me. Wonderful.
I walked out of the room and made some calls but it was a done deal. Luckily an old mate of mine was a PM for another company who were also contracting for the same client. Asked him if he needed anyone, he did and I went home and came back the next day and started with them. The boss of the other company would not look me in the eye from that day on! Pr1ck!
I later took great pleasure watching them getting kicked off the project about 6 months later.
When your manager calls you at 3pm on a Friday its always a bit of squeaky bum time!!
A few thoughts on the negative sides of contracting...
You're trading on the skills you have, nobody's going to hire you to learn stuff on the job in the way you'll often expand your skills when working for a company. If you're motivated enough to keep your skills up to date then great, but not everyone is.
When you start out it can take a while to get your first contract unless you already have something lined up. See about building up a decent network before quitting the current job in the same way you'd start looking before handing in your notice if going for a permanent job.
Don't under charge, there's loads of online calculators around to work out what your tax/NI etc will be. Factor in insurance, more travel than your old job, and try to take a stab at how many days a year you expect to be employed to work out a sensible rate.
I found these guys, in their previous guise as the PCG, quite useful https://www.ipse.co.uk/
You're trading on the skills you have, nobody's going to hire you to learn stuff on the job in the way you'll often expand your skills when working for a company. If you're motivated enough to keep your skills up to date then great, but not everyone is.
When you start out it can take a while to get your first contract unless you already have something lined up. See about building up a decent network before quitting the current job in the same way you'd start looking before handing in your notice if going for a permanent job.
Don't under charge, there's loads of online calculators around to work out what your tax/NI etc will be. Factor in insurance, more travel than your old job, and try to take a stab at how many days a year you expect to be employed to work out a sensible rate.
I found these guys, in their previous guise as the PCG, quite useful https://www.ipse.co.uk/
red_slr said:
MOBB said:
bigandclever said:
red_slr said:
When your manager calls you at 3pm on a Friday its always a bit of squeaky bum time!!
Your what? 
bigandclever said:
It was only a bit tongue in cheek. But "your manager" is permy-speak, and contracting requires a different mindset.
Someone has to sign your time sheet off.... Walking up and saying b*tch better have my money might not go down well.....
My advice, blend in, people who pull the "contractor card" don't last long.
We used to be known as "CS".
It means Contractor Scum.
bigandclever said:
It was only a bit tongue in cheek. But "your manager" is permy-speak, and contracting requires a different mindset.
It's certainly true that to be outside of IR35 it's important to have the right mindset. A contractor informs clients that they plan to be away on certain days, but are flexible on scheduling so as to not impact the project, rather than putting in "holiday requests", for example.
Ostensibly the person who signs your timesheet is your "principal point of client contact" or "signature authority" but frankly those phrases are pretty clumsy and it's often easier to lapse back to "team leader" or "project lead".
But, yes, mindset is everything. Although obviously it's a balancing act on not antagonising people either. But by the same token, it is important not to let things slip. Certainly don't sign anything that refers to you as an employee, do not divulge your NI Insurance number even when it is only needed as a unique ID (I've had that before), don't have a client email footer on your client-supplied email that makes it look like you are "part and parcel" of their organisation, and document everything that shows you are not considered an employee of the client.
ClockworkCupcake said:
Very dangerous if you want to be outside of IR35. Blend in too much and you will be considered "part and parcel" of the client's workforce which is an indicator of disguised employment.
Mmm, bit cloak and daggers though. Even HMRC say the facts within your contract is the main indicator of employment status.I know one contractor who declares himself caught under IR35. I think its bonkers tbh but each to their own!
Its a long time since it has had any impact on me though.
ClockworkCupcake said:
Very dangerous if you want to be outside of IR35. Blend in too much and you will be considered "part and parcel" of the client's workforce which is an indicator of disguised employment.
IR35 is a complete farce....i know someone, who has contracted for 7yrs at a firm
Also... i knew someone who had contracted at a firm for 15+yrs...
If you just started a family I would stay permy, I contracted for circa 15 year in tech and switched to permy shortly before I started family, ok its few quid less than contracting but I get so much more flexibility as permy, come in late, leave early, work from home a lot, loads of free work childcare etc, some job security, pension etc etc, training.
I'm not saying contracting is a bad but the good times have gone imo, Ive seen IR35 and all the schemes people used and I just don't trust HMRC, the reality is 95% of contractor fail IR35 but choose to ignore it. HMRC have no duty of care and can retro apply retro apply re-interpreted law, its totally unfair I agree but that's the way it is. In respect of people ignoring IR35 or thinking HMRC will never come a knocking I know of 5 people all now looking at potential total tax bills / interest / penalties of over £300k from income earned over 8 / 9 years ago. If you still want to contract and outside or IR35 go for it just stick the £ you save from being outside or IR35 vs inside to one a side just in case HMRC do come back.
I'm not saying contracting is a bad but the good times have gone imo, Ive seen IR35 and all the schemes people used and I just don't trust HMRC, the reality is 95% of contractor fail IR35 but choose to ignore it. HMRC have no duty of care and can retro apply retro apply re-interpreted law, its totally unfair I agree but that's the way it is. In respect of people ignoring IR35 or thinking HMRC will never come a knocking I know of 5 people all now looking at potential total tax bills / interest / penalties of over £300k from income earned over 8 / 9 years ago. If you still want to contract and outside or IR35 go for it just stick the £ you save from being outside or IR35 vs inside to one a side just in case HMRC do come back.
Edited by PostHeads123 on Friday 16th June 16:06
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