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On the 4 months savings thing.

When I arrived in London (as a foreigner fresh off the boat) I had about 4 weeks worth of money. I couch surfed and worked the recruiters endlessly and landed a job in 10 days. It wasn't the greatest job but it was a start - a 3 month contract building a new system. It's amazing how motivated you can be when you see your bank accounts date with destiny. After the contract was signed I used the remainder of my cash and got a 'bedsit' - a tiny room - and asked for my first weeks pay to be paid on Friday afternoon. Within a month I had a place to rent, a social scene and was busy working on getting the next job.

So if you don't have any dependents I think you can take the high risk plunge and go for it. Certainly the best decision I ever made in my entire life - and by that I mean life changing in a way that I cannot even imagine how my life would have been had I stayed on my prior path.

In one of your other comments, you note that was in boom times.

Kind of - it wasn't booming when I first started, that was later on.

I had a friend who made the decision to do the same thing, but arrived in October 2001. After three months of job searching and finding nothing, he spent all of his cash and then some, and had to return broke and dejected.

Agree with all of this post.

The only thing I'd expand on is that there is a big difference between permy recruiters and contract recruiters. The best contract recruiters know that they will have roles to fill in 6 months time, so they're going to want to keep you on their 'roster'. The best contractors know that contract recruiter help you make more money.

Agree entirely. All my contracts come through recruiters, and I've never had a problem with them, once you get a good rapport going with a decent contract recruiter they'll do all the hard work for you.

Agree with pretty much everything.

Recruiters are annoying but some companies will only hire contractors through recruiters so it's worth spending a little time dealing with them (but don't hesitate to stop talking to any that isn't professional, there are plenty others).

For the rate it depends on the language and the industry as well, java in finance is always going to be higher than python in a startup but if it's below 300/350 you can walk away.

I stopped being a contractor last year, i'll have to check those dividend tax changes

What made you do the switch back to permanent?

I started my own agency with a couple of friends (link in profile)

> Most permanent jobs have a 4 week notice period

Really? In experienced level dev jobs? Most of the people I know are on two months notice. Three months, which is what I'm tied to, doesn't seem uncommon for senior devs/DBAs/similar.

It's also worth noting that (at least in the UK) such notice periods are not legally binding.

You can only be forced to give a notice period up to your payroll pay frequency. So for example, if you get paid monthly then you cannot be sued for failing to give > 1 month's notice!

... But of course, most people will still honour their company's "3 month notice" (or whatever) period out of good faith, as it's generally a good idea not to burn bridges.

>It's also worth noting that (at least in the UK) such notice periods are not legally binding.

Erm. Yes it is.

It's unlikely that your old employer would legally enforce a notice period. But they are entitled to sue for lost revenue.

There are standard periods depending on how long you have worked there but after a probational period, the contract lengths are legal.

http://www.thisismoney.co.uk/money/experts/article-2490277/D...

I wasn't aware of this. Do you happen to know which law/act/whatever covers it? Would have come in handy a few weeks ago when I was trying to negotiate my way out of a 3 month notice period.

Are you sure about that? There is a statutory notice period of one or two weeks depending on how long your employment has been, but this appears to be trumped by contractual agreements:

https://www.gov.uk/handing-in-your-notice-resigning-leaving-...

The statuary period sets the minimum that an employee and an employer must give. Unless otherwise agreed this is the only value to care about. A longer notice period can be arranged via contract. A shorter period can not be agreed (well it can, anything can be agreed really, but it will not be legally enforceable).

IIRC the statutory rules are as follows:

* After one month of employment the minimum period is one week

* After two year's of employment the minimum period becomes two weeks

* Each year after the first two one further week is added, up to a maximum of twelve (so because of how long I've been here the three months dictated by my current contract is pretty much aligned with the statutory minimum notice period).

While there is some room for ignoring a contract with unfair terms, unless the notice requirements set out in what you have signed are rather egregious you will be expected to honour them unless you successfully negotiate otherwise at the time. People can and sometimes do ignore this though because the costs and time involved in taking you to court for breach of contract are high enough that it just isn't worthwhile to most employers, but this is a risky stance to take as you could create a reputation for yourself that travels around your industry fairly quickly and may stick around for some time (and, of course, such action is morally wrong: if you signed a reasonable contract in good faith you should stick to it just as you would expect the other party to). If your contract (that part or all of it) can be declared void because it is not enforceable (you can't sign away the statutory minimum) this becomes moot. It can also become a moot point due to some other significant breach by either party then (well by the letter of the law it doesn't, but "you could take me to court but you don't really want the whole truth being a matter of public record do you?" can be a powerful argument in dissuading the other party from taking action).

In London, I'm currently on a 2 month notice, however that has always seemed unusual to agents and people I interviewed with. Also, that's a fixed period for senior and junior position - in other companies I worked for, there was always a special clause like "4 weeks + 1 week/year after the Xth year, capped at Y weeks"

That must be very dependent on your company sector and market. Also, notice is generally reciprocal, so a bigger one is generally considered a benefit - as practically, the company has to pay you when they terminate you, but you can almost always negotiate a much shorter notice when you resign.

Often the remainder of it is 'gardening leave' or just paid out as cash.

Where I worked, when the decision was made that someone was no longer going to be there, they didn't spend much time in the office.

I've never seen more than 1 month notice in a standard contract. Everyone I know who has had more than that negotiated it for themselves.

At my current company in Germany, notice period is 3 months from the end of the quarter. That effectively means it's 3 to 6 months, depending on the day you quit.

It might be on the longer side, but it's not unusual for Germany for full time professional position.

On the other hand, it works both ways, so it's not that bad as it sounds at first.

Should have mentioned I was referring to the UK

That's been my experience when hiring people. I only hired one person with a 12 week notice, everyone else was 4 weeks. YMMV, I guess.

I have a 12-week notice period (UK government), as do most of my friends (mostly finance). We'd all started on 4 weeks as junior developers, but it had been increased with promotions.

They are usually negotiable, though.

"Actually it's now super easy online using HMRC's site now” - You probably have Companies House in mind. HMRC deals with things like VAT and PAYE registrations. Companies House can be used for company incorporations. Furthermore, you can only use Model Articles on Companies House website. This means that you cannot set up multiple share classes during company incorporation (e.g. voting shares, profit sharing shares).

> This means that you cannot set up multiple share classes during company incorporation

You actually can - you have to select from a pre-given list of share classes, though, but I did a priority-and-ordinary shares setup thing online via companieshouse - unless that's not what you meant?

You can always do it "manually" by sending in your articles, the form, and your £25. I did this years ago for a company limited by guarantee.

I would expect contractors would not need those.

>> Sure. Most permanent jobs have a 4 week notice period, and you can find contractor roles happy for you to start in 4 weeks. Line one up before you quit, and there's no 2-3 week mad rushing around trying to find a contract.

One other thing to bear in mind - if you apply for a job in Banking the credit history, criminal records, references etc check will take 2-3 weeks anyway.

> For Central London, a developer should be asking for £300-£600/pd depending on seniority and what they're doing.

That seems pretty low to me. Here in the Netherlands contract developers get about the same, between £400-£600/pd (actually between 70~90 euro/hour) but cost of living is way lower than in central London.

Interesting, is that via an agency or via your own clients? I'm a Tech Lead and would like to start contracting at some point.

Where do you go for your contact leads in NL? I know the London market well but find it hard to find any decent Euro contracts.

Most contracts are at large enterprise size companies, like isp's, banking, government. Those companies don't do direct business with contractors but post their contracts through brokers, here some large ones:

https://qualogyportal.secure.force.com http://www.it-staffing.nl/ https://www.headfirst.nl https://www.freelance.nl/

I'd like to know this too.

And me

I'm in the Midlands and have no trouble finding work around the mid-high end of that range. Perhaps the streets of London aren't paved with gold after all. ;)

There's less supply in the Netherlands. I get a lot of offers here in London for contracts in the Netherlands.

tell me more...

Not much more to say. Companies in the Netherlands are advertising roles and contracts here in London. I have friends working in agencies in the Netherlands and they have a hard time sourcing developers locally.

Amazing that 15 years ago I was making more than 400 pd (contract was actually 45 ph, and you could push overtime if you wanted) and I was pretty junior at the time. And I was only paying 130 pw rent in Zone 2.

Ah, boom times. Don't you just love 'em, and miss 'em when they're gone?

edit : original post had a calculation mistake in it.

The math suggests you were working 13 hour days? Are you sure that's correct?

Ah yeah, you're right.

It was a while ago...getting fuzzy. It was more like 400 pd

    > change how dividend tax works

Is there a good summary you would recommend for accountancy-challenged developers? Should we get any leftovers in business bank account out through more dividends now and accrue higher personal income tax or wait and see?

There isn't much you can do really. The overall increase in annual tax is not going to be that big. If my calculations are correct, if you want to pay yourself ~100k per year you'll end up paying 2-3% more tax.

https://www.crunch.co.uk/blog/contractor-advice/2015/07/09/w...

It depends on what your strategy is and the specifics of your situation. http://www.contractoruk.com/money/ifas_guide_avoiding_new_di... has a generic guide about the new dividend tax.

IMHO, just get an accountant.

I have a popular one, and they are rubbish. I'm on my first contract and I have no idea what I'm doing tax-wise. After £10.6k in salary they say one could take £28.5k in dividends before higher tax kicks in. So what do people do with the rest? Accept hight tax or leave it in business bank account and wait for next tax year?

Not all accountants know a lot about tax. Tax lawyers will be better at reducing your tax rate, though they can be expensive (and unnecessary for basic stuff).

The general 'rule' is you tend to only take out as much as you need. It's usually smart to always use the lower rate tax bands and then decide what to do with the excess that is left in the company.

However, since they're increasing the tax rate, now might be good time to take out a higher dividend, since you'll pay more to take it out next year. If (tax now < tax later) -> take it out. :-) Unless you're wealthy enough to never have to declare dividends again, you'll want to take out more this year.

Also, don't forget to expense as much as you legally can. That's all tax deductible BEFORE corporate tax.

What can you do with the rest?

a. Invest it (compound interest: shares/bonds/property/etc)

b. Give yourself a loan from the company. You'll have to pay interest, but it's a relatively low rate (3.25% p/a I believe).

Wealthy people tend to be (relatively) poor in their personal name, but own a lot of stuff through companies - e.g. planes, boats, property.

  I have a popular one, and they are rubbish.

Imagine you can sell small business accountancy services for £300 a year; and you can hire an accountant for £40,000 salary for a 2,000 hour year. Add on an extra £10,000 for tax, insurance, office space, parking, advertising, and things like that.

If you do an average of 6 hours of work for each client each year, your accountant can serve 333 customers and bring in £100000 a year, making £50,000 in profit.

On the other hand if you automate heavily and get rid of all the customers who have complex needs or who are calling you a lot, so you do an average of 15 minutes work for each client each year, the same accountant can serve 8,000 customers and bring in £2,400,000 a year making £2,350,000 in profit.

I know how I'd run my accountancy business, if I had one!

You can stick £40k in your pension as an employer contribution...

I just take what I want and pay higher tax as necessary. You still end up paying less than the average worker anyway since there are no NICs on the higher level of dividends. Other than that, I reinvest it into the business, but I can't be arsed with pensions.

In the 14 months you've had the company registered, have you had any dealing with Inland Revenue inquiring about your accounts or coming to check up on you? I'm asking because at my current work they were always coming to check since the business got its funding. There was no wrong doing of course, but it did waste a lot of everybody's time.

I've had ltd companies in various forms for ~ 10 years. No check-up yet, other than my most recent VAT registration, and even that was simply them asking me to send a few documents. I have no idea if that's typical, but I always buy tax investigation insurance.

>>>> it took about an hour of filling in .gov.uk forms online. I would recommend just doing it yourself.

Here is a good guide from a gov.uk site [1]

[1] https://www.gov.uk/limited-company-formation/overview

Does anyone have any experience with a company like Giant or similar? Do they allow contractors who remote work?

In the past I've worked under Giant and Parasol. I used Giant back in 2008 when I wasn't sure if I was staying in contracting for forever. All umbrellas are much of a muchness; there's a legal limit on how much tax efficiency they can help you with, so you'll take home the same with whoever you choose. In the long term a limited company is definitely the way to go.

They're just a middle-man who invoices on your behalf and pays you based on that. Using someone like Giant you're ceding a lot of the financial (tax) advantages of contracting though, since you pay tax as a PAYE employee.

Those tax advantages will start to disappear next year.

Obviously it depends on how much you earn and pay yourself, but I think for most people they'll still be better off as a limited. Next year's changes only add up to about 2-3% increase in tax for someone taking minimal salary and the rest as dividends.

People I know who've worked with them are pretty happy. They've got a reputation for being super super responsive, too, so email or ring them and ask?

I totally agree