Question about Contractor inside Uk

Cathodeus

Hi all,

I just received an offer from a big UK studio. They propose me to be a contractor. As i worked in France than Belgium i really don't know what to choose between the "Paye route" or the "Umbrella contractor".

Can i have some advices from you ? Wich is the easier for a stranger in term of document to fill in the gap ? Wich is the most intresting and why ?

Thanks in advance.
Massimo

almighty_gir

i think umbrella contractor might be the better solution, as it means you sort your taxes yourself. PAYE means "Pay As You Earn", it's a way for you to pay your taxes while receiving your paycheck, you don't ever actually file these taxes they're done automatically.

since you're from Belgium you're subject to Belgian taxes and not UK taxes, so going PAYE means you'll be paying taxes to the UK government, AND you'll have to pay to your government too.

by going with an umbrella, i believe the umbrella pays you the full amount and you then sort your own taxes.

Cathodeus

Ok thanks almighty_gir. I live actually in belgium (where i own a house) but i'll be living in Uk 6 months for this project so, do your answer will stay the same one with those additional information (during those 6 months i'll be living in Uk but my main address will stay in belgium).

I actually think that if i work and live in uk 6 month i have to pay taxe in UK. Is that an error ?

almighty_gir

if you're working in the uk, then go PAYE. you won't need to pay any taxes to belgium.

what will essentially happen is, if you earn £1000 per month on PAYE, your payslip will look something along the lines of:

hours worked - 40
gross pay - £1000
total tax - £200
net pay - £800

you'll also have a PAYE reference number and tax code on your payslip.

the difference is subtle but it basically boils down to: if you're PAYE then you're an employee of the company (even if it's a temporary contract). if you're not PAYE then you're an independant contractor hired for a service and not employed by the company.

crazyfool

Don't forget national insurance may not apply but worth looking into,

almighty_gir

national insurance is 13% i think.

Cathodeus

Ok go for Paye. I'll be paid less as "paye' than 'Umbrella Contractor" umbrella contractor are better paid. It's 20 pounds more per day than a "Paye".

Other question.

I want to know in UK if i can be fired at any moment as a "paye" and if it's the same as an "Umbrella contractor". Wich is the safer ?

This sould normally not happened because i'm a good worker with goog xp but i prefer to know before.

almighty_gir

in the UK, most companies state that they have a probational period of 3 months, during which time they can let you go at a moments notice. in reality though they actually can do this within the first 12 months.

as a contractor you can be let go pretty much any time, BUT depending on your contract you may be able to claw back the value of the contract from them if they've let you go for anything other than "you aren't good enough".

Cathodeus

Ok thanks everybody.

crazyfool

Most places don't give the option though, they either go through PAYE or pay you the full amount and get you to sort out your own taxes. There is benefits to both, PAYE means you don't need to worry about sorting out your own taxes, on your own you can look into expenses and claim back some of your expenditures, but you gotta sort out your taxes which is never fun and be very diligent with your money so to keep the tax money untouched.

National insurance is interesting as there are different classes depending on what you do, self employed pay a class 2 and 4 I think whilst employed pay class 1 I believe, they still equate to the same ish amount though I think. Also if you are self employed and owe over a £1000 in taxes you will be asked for contributions to next years taxes upfront, which is usually 50% of your tax bill, due on top of your taxes that are due to be paid by January after you filed and then the other 50% is due in June I think. It's a bit of a bugger but it just means you are paying taxes on time, what's bad is they assume you will make that amount the next year on blind faith, that's why it's best to file close to the deadline when you know where you are at and you can seek help if its not working out.

That's self employed in this country I think when you start earning well you need to look into limited companies aswell as you pay corporation tax instead and no national insurance I think, but you need an accountant for that which is gonna cost you over £1000 a year anyway, that's for a good one haha, not dodgy dave down the alley

Not sure if this applies to overseas workers or not though but definetly worth looking into. If the options there though then PAYE is the nicest