Advice for Independent Contractors

NOTE: This post is more than 12 months old, and the information contained within may no longer be accurate.

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We are used to dealing with Contractors at Wingate

Many of my clients are City professionals specialising in Technology, Finance or Project Management. Typically they work for large Investment Banks on a short-term contract basis, due to the nature of their work, and the flexibility this provides senior management. In most cases they will have established their own limited company to operate from, invoicing their employer a daily rate in exchange for their services.
The investment banking sector is extremely segmented, and individuals who possess the right combination of skills and expertise at the right time can command high daily rates. In addition to the earnings potential, the limited company arrangement means that remuneration can come in the form of a dividend, rather than a salary. This can lead to a tax benefits and greater take-home pay.
Be sure to check with your accountant that you don’t fall foul of IR35 and are providing a ‘contract for services’.

We understand your situation

Life is complicated. Working in the highly competitive City environment can be stressful for anyone but Contractors have the additional worries of where their next contract will come from; the ‘opportunity cost’ of taking a well-deserved holiday; the absence of a stable earnings over the long-term; and missing out on the perks their ‘salaried’ colleagues benefit from, such as pension contributions, sick pay, life assurance, and private healthcare etc.
It is not uncommon for clients invoice between £500 and £1,000 per day. They are typically at a stage in their life where expenses are high: mortgage repayments; school fees; holidays; maintaining the home etc. However, even in a particularly ‘expensive’ year they will almost certainly earn more than they spend, which results in cash surpluses building up in the company bank account at a steady rate.
“What should I do with this money?” is a question I get asked every day, and the cause of many sleepless nights. The answer, rather predictably is “it depends”.

Contact Paul Hyland at Wingate Financial Planning on 0188 333 22 62

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24 Nov 2021

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