IT Contractor Payroll
Of all the contractor groups currently operating in the UK it seems as though the IT contractor has been keenest on sourcing the right payroll solution. Many IT contractor payroll solutions have sprung up over the years in order to service this need, few have lasted the sands of time. One thing is certain though and that is most IT contractors seem to prefer the option of having somebody manage their payroll for them as opposed to forming their own limited company. These are just some of the payroll options that have been available:-
1. The Offshore Partnership. Based around double taxation legislation that permitted offshore companies to handle your payroll in a very efficient way. These schemes have all now been closed due to updated HMRC legislation.
2. Employee Benefit Trusts. Perhaps the most controversial payroll scheme to date for IT contractors. HMRC insist these are no longer compliant yet many scheme providers insist they are. Several providers have been investigated by HMRC. (Please see here for a tax efficient alternative to the EBT.)
3. Umbrella Company. A payroll solution that gives you the full statutory benefits of being a PAYE employee. Of course on the downside it is the most expensive payroll solution for IT contractors. The main benefit of an umbrella company is that it removes the burdens of running your own company.
4. Invoice Only (Gross Pay). Designed for contractors who are registered as self employed. An invoice only scheme gives you the ability to remain completely in control of your finances ensuring that all payments due to you are received gross. It’s then up to you to manage your own tax affairs. The main benefit for self employed contractors is that it removes the burdens of invoicing and chasing payment plus other administrative tasks.
There are several other solutions but the providers tend to be very shy on revealing the practicalities involved! If you’re currently an IT contractor operating in the UK and are stuck for a solution please feel free to use the contact form at the top of the page and we’ll do our best to put you in contact with a suitable payroll provider.
Benefits Of IT Contracting
Benefits IT Contracting In The UK
Just the number of IT professionals that choose to contract rather than work as employees in the UK tells you something, it tells you that being a UK IT Contractor has many benefits over the traditional role of employee for a company!
Greater Pay
In the IT sector in particular the pay differences between contracted work and salaried work can be enormous, the average being two to three times the hourly rate of non contractors.
Greater Choice
Being a contractor allows you to decide on the type of tasks you wish to undertake, if you don’t like what a contract involves then you don’t take that contract. As an IT employee it is not unusual for you to end up also being the person who fixes the chairs, repairs the photocopier and many other “technology” related tasks. Contracting allows IT professionals to choose the work they want to do and be more valued in the process.
Better Knowledge
In the ever changing world of information technology it is essential for the modern professional to be able to learn new skills. In a traditional role within a company many IT staff are stuck doing the same job(s) for years on end and never need or want to learn. Contracting requires that you can offer the skills that are most in demand, this benefits your clients and ensures that most contractors are much more flexible with their knowledge than other IT professionals.
Greater Flexibility
As a self employed UK IT Contractor paid holidays are out but on the other hand by working for yourself you have much greater flexibility when it comes to taking time off. For contractors with family commitments the ability to earn large amounts of money in short spaces of time means that the flexibility is there to enjoy more family time. For many others it is not unusual to work 6 months on and 6 months off. You always have the flexibility to not accept a contract if you’re not actively looking for work.
