In a permanent role I can leave at any time with one month notice.If I take a 6 month interim contract then is there a greater expectation that I will stay for the full 6 months? Or can I give one month notice?

It depends on the exact wording of your contract, but the norm in interim management is that it will be written to ensure that you have to fulfill the term of the contract, and should you fail to do so (other than for reasons allowed), in theory the client has the right to sue you for any additional costs associated with getting someone to fulfill your obligation.This does happen in the contractor market where people dip their toe into contracting but for some reason don't pay attention to the word "contract" in contractor!It is also the norm that the client DOES have some sort of notice period, so they do not have to see through the entire contract should they cnage their mind. Unfair perhaps, but the day rates should be calculated to compensate for the inherent insecurity.In practice it very rarely happens.

I'd add that when I take a contract position my terms also give me a notice period (usually 30 days if you're wondering).Works both ways and should be no different to a perm job in giving both employer and employee similar rights. No client of mine has so far had any issue with this 2-way arrangement.

"employer and employee"goodness me - now that's daft. 4 letters:HMRCtwo moreIRcoupla numbers35

Freelance contracts should be written to be the same as a contract between e.g. EY/PWC/accenture and their clients, not employee/employers. Unless youwant a nice HMRC visit and a big tax bill!Normally a consultancy agreemetn gives the client some right to what is referred to as "cancelation for convenience" e.g. budget cuts, director gets fired, just changed thieir mind, etc. Normally the recompense to the consultancy is a minimum notice of this intention OR a flat fee. Its not much recompense, because the assumption is that they'll have been paid on a T&M rate (or portion of fixed price) prior to the cancellation.The right to cancel for the consultancy (unless its pure open-ended T&M) is usually restricted to the right to cancel if the client makes it impossible to deliver (e.g. does not make decisions, provide access to data, provide a techy environment, etc). Normal practice would be for there to be a process whereby the consultancy notifies the client of this impediment in writing and allows a cerain number of days for the impediment to be removed, after which they can expect to have the right o walk of site and still have the right to bill for the days worked.If you wish to work outside IR35 (youdo, you do!) then you must think of yourself as a director of a consultancy company, not an individual.

OK so I work outside of IR35, director of company, paid in dividends etc. etc.BUT....can someone enlighten me as to the real financial benefits. Having just completed my 1st year of doing this all I can see is that the taxman simply gets his lot in different ways and my personal net takehome pay is not that much different to earning under PAYE - OK so you avoid NI and income tax but once you have taken off corporation tax from the company, then the dividend tax when your company pays you dividends it all ends up being not too disimilar.Am I doing something wrong here (or do I have a cr@p accountant?) or when referring to IR35 do people only compare personal tax (which I agree is different) and completely ignore the fact that HMRC took corporation tax out of your (company's) day rate? (which for a 1 man company is essentially your income from your client)

Happy to help, but you'll have to spill the beans on some personal info the benefit depends a lot on personal circumstances....1. Days billed in a year2. Day rate3. Cost of commute to client site 4. Single or married5. Does wife work if you are married? what income?6.Any kids? Do they go to nursery or child minder?7. How much cash do you need every month to live on?8. Total turnover per annum? Presume you are VAT registered?I woud definitely suggest a good accountant - I pay a little bit more for mine (about 1200 a year, when I could get it done for 900), but she's saved me loads of money and is abosulutley 100% on the ball.

1. Approx 1752. £8003. Weekly travel expenses £10004. Married5. No she is also a Director although she doesn't do much!6. 1 2yrs old. Wife looks after him.7. We're taking about £45008. c.£130k at present. Yes VAT registered.

OK, so 175 days at 800 is about 140K whch is in line with your comment of turnover being about 130K ex VAT.1) I presume you have looked into flat rate VAT registration which allows you to charge 15% VAT but pay only 10%? It may be that your very high travel costs make this not worthwhile as you woud not be able to claim the VAT portion of those back.2) 175 days suggests about 35 weeks working every year. Assuming you have the £1000 travel cost every week, then 130K - £35K leaves you £95K profit. Lets assume you have some other annual business costs such as insurance and accountancy fees, totalling £5K. That makes your profit £90K.3) You pay 20% tax on 90K (18K), leaving you 72K.4) You should pay yourself and your wife £477 a month, at that level no NI us due, but you still benefit from NI related benefits. Thats £5700 times two equals £11,400The remain 60K should be paid to you and you wife equally in dividends (she will need to own 50% of the shares in her neame). These will incur no extra tax at this level because fo the tax credit due from the company tax paid onthe same income.5) In short for 130K t/o your family income can be 72K after tax. 6) To get a salary as an emplyee you would need to get 72K plus 35K in travel!!) equals 107K after tax.7) Gross salary would therefore need to be £170KYour problem is the very high weekly travel costs. Not many employees woudl incur that level of travel expense out of their net salary. If you were spendign a more normal 500 amonth, the benifits of IR35 would shoot up. Most contractors outside IR35 can turn a 130K turnover into an £85K NET income AND keep 15-20K in their company reserve for a rainy day. Of course it worth remembering that you're doing all this on just 175 days a year. Employees normall work 240 day a year to make that money!!Also is the 1000 a week travel likely to be a constant? Its a bit chunky!!

Hi IR 35 man - me again,Ok so my turnover numbers aren't far off those of Freelancer's except for:3. cost of commute = £30 pw4. & 5. wife who is earning close to higher rate tax threshold (not a director in my business - could change that but was advised as there was no basic rate tax left to use there wasn't much point)6. 1 kid in nursery (1K / month !!!)7. Last year I took the full personal tax free allowance out of the business & lower rate (tax credited back) dividend allowance (6K + 31K)Also VAT registered and on flat rate scheme.The big question is this (which I sort of alluded to in my initial post above without giving full details) - when you hit the higher rate thresholds doesn't being outside IR35 and earning PAYE begin to converge. i.e. there is not much difference?So far as you can work out from numbers above I have left the balance of what I invoiced (my company earned) in the company to use as tax free salary & lower rate dividends if times slack off BUT if I keep continuing as I am then these retained profits will keep increasing. Is there a clever way of getting them out while minimising tax liability?Someone suggested Entrepreneurs Tax Relief but as that involves shutting down the company to take the profits (& then starting a new one to keep working with all the associated hassles e.g. paperwork, new bank accounts, client contracts with wrong company etc.) it seems excessive to keep doing every few years.Any suggestions?

Dear oooo eer (did I spell that right - hate getting peoples name wrong)The bad news is that you are subatantially correct. The benefits narrow considerably (although not to zero) when you start taking above 6+31 per person.Tapered cap gains (entrepreneur allwoance) is the favoured method of getting the retained cash out every ten years or so and definite;y outweighs the hassle of setiing up new companies (2 hours work online these days).The other option is to regard retained earnings as a pension pot - a lot of contractors pay themselves 6+31 for 20 years and then find they can continue to pay themselves 6+31 for twenty years of retirement - not many employees will get a pension like that.Other favoured contractor approach is to work up to the point that tax starts to hurt and then take lost of time off - maximises the work/life balance rather then cash, but explains why lots of IT contractors get 3 skiing holidays a year. Th enice thing is that this approach allows you to turns down low rate work and will slowly push your average day rate up to the poin that you need fewer and fewer days...(in a normal market, not at the moment though).Much as it pains the nasty little capitalist in me, tax is a necessity and we need to accept that all loopholes have their limitatiions....boo, hiss.PS other option is to become ill on a regular basis and get maximum benefit of your tax via the NHS...bit radical though.

Hi again IR 35 man,Thanks for the quick reply. Alas I was looking for something I may have missed but at least thanks for confirming what I feared - that sadly the taxman does have his many ways of parting you from your hard earned dosh (when you exceed the higher rate threshold).However on the bright side as my accountant said when we discussed this - "would you be earning this much if you were in a permanent job"....wise words indeed to put things in perspective - you have to be earning a lot to pay a lot of taxes - lessens the pain a little when handing over the loot to HMRC!Thanks also for the different options of how to approach earning and paying yourself over the years to come. As before - this is only my 1st year of doing this so hadn't consdered all of these.

Thanks for your reply IR35.All of my travel expenses on my contracts get billed directly to the client, so they net off (but as you say I make a few % on the VAT).My expenses are likely to remain at a level between £700-£1k a week, but I'm not too concerned if the client pays them.Of course, I assume that I would be better off if I had an all inclusive rate that also covered expenses, because would I then be able to claim expenses against the business and effectively take more cash out? Not sure if I'm right with this?

Are you billing 800 a day plus expenses, or are the expense scomign out of the 800 a day?

£800 + expenses

then the narrowign will be more obvious, as your 130K income will be mainly profit (after a few costs like insurance and accountant) - lets assume 125 profit.You'll pay 6K to you and wife pre-corporat etax, leaving compnay profit as 113, on whcih tyou'll pay 20% corp tax. Thsi leaves circa 90K in dividends, but you can only pay out 2*31 without attracting 22.5% tax (40% minuts the tax credit for the corpoarte tax!)Shi*&e typing above -- sorry can't be bothered fixing it, its late!Cheers

Cracked it - become a mormon - have several wives and hey presto......6K salary + 31K dividend for each one! Simple eh?This foolproof scheme is also scalable - add 1 new wife for every additional 37K you earn.(check with your lawyer though - it may only work in Utah!)

Wonderful idea, but unfortunately I seem to recall that The Church of The Latter Day Saints requires all solvent members to pay a 10% tithe to the church.It would appear that if the govt doesn't get their pound of flesh, the Osmands will!