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I may have the opportunity to do my current job, but as a self employed contractor (on a considerably higher rate). who else has made a similar move and would you recommend it?
Be aware that if you're doing the majority of your work for one company, HMRC may say you're still an employee. Also, why are the company offering this? The big advantage of having contractors instead of employees is you can get rid of them easily.
So could you diversify, offering the same skills to other companies? If you can be truly self-employed, working for several different clients, it's worth it - otherwise I wouldn't.
You may find that HMRC are not to keen on you consulting for your former employer. Check this carefully if the the role is long term.
I may have the opportunity to do my current job, but as a self employed contractor (on a considerably higher rate). who else has made a similar move and would you recommend it?
I have. It allows me to work fewer hours and take on other interesting work. Just make sure you charge enough to cover all the additional costs which your empoyer is currently picking up.
e.g. Death in service benefit, sick pay, critical illness insurance etc. etc.
Good luck
I stopped working for 'the man' a few years ago and I really like it. It sounds like you will still be doing the same job but with a different pay structure so not quite the same thing. HMRC aren't that keen on you claiming to be self employed but working for a single employer so check that out. Also do the sums carefully. The headline hourly rate might be better but you will lose a lot of benefits (pension, holiday pay, redundancy pay, sick pay, etc). It should still work out better but you need to be better at financial planning and keep something stashed away in case it all goes wrong (which can happen very quickly without the employee safety net)
EDIT: lots of answers while I was typing but this +1: [i] If you can be truly self-employed, working for several different clients, it's worth it - otherwise I wouldn't.[/i]
Also, why are the company offering this?
I wouldn't be working for my current company (a consultancy company), but would be the same client (different, but similar project) with the opportunity to work for different clients too.
As above. Look into IR35 and be confident you would fall outside of this for each individual contract. I'm guessing if you were just to go from perm to contract at the same company without a break the hmrc would still see you as an employee.
JE - that's pretty much how I started as a freelancer over 7 years ago. Initially with one existing client from my previous employer, and within a few months had 3 or 4 clients to keep HMRC from my door. RE IR35 as long as you can demonstrate that you supply your own equipment (say computer etc) and have control over your work patterns, you can get away with 1 main client and as little as 1 or 2 smaller clients paying even only once a year.
Factor in insurance (I use Hiscox, very good), and if you have a home office you can use apportion a reasonable amount of your household utilities costs to offset your tax bill. We generally use 1/3rd.
Financially Id recommend building up a 3-6month buffer of cash to cover loss of contracts. Also if you have a pension, continue to pay into it (tax deductible). If you dont have a pension, sort out some kind of investment/pension pot. I split mine between an old pension plan and ISAs etc.
I wouldn't go back - but my change involved staying in the same industry, but going back on the tools.
I make good money, but have a look at some of the (estimated without checking my books) costs I have to cover in my rate....
Vehicle lease - £375pcm
Vehicle maintenance - £75pcm
Fuel - £600pcm
Accomodation - £800pcm
Vehicle insurance - £100pcm
Liability insurance - £50pcm
Tools - ?
Holidays - ?
Sickness leave - ? (albeit I'm self-employed, so I don't get sick) - didn't work most of September due to injury though
I'll turn over anywhere between £80k and £100k (depends if I do nights), more if I use materials/sub-contractors and will actually 'earn' £50-60k from that.
If you are an IT contractor and just turn up to an office, obviously your overheads will be a lot less, but make sure you have it covered.