Pondering a venture into the realm of software engineering contracting in the UK? If lured by the prospect of amplified pay, adaptable work schedules, and exposure to various tech stacks, then this all-inclusive guide is written for you. It’s quite clear; setting off on the journey to becoming a contractor is unlike any other freelance job around London. Yet, the allure of lucrative returns and diverse experiences should be taken into account.
This guide, enriched with authentic experiences and practical advice, will serve as your roadmap to comprehend the intricacies of contracting in the UK – its prerequisites, and crucial things to think about before you transition from a permanent role to a contracted one.
A Close Look at Contracting in Software Engineering
Contract work, in essence, means working for a company without being a permanent employee. It aligns with the manner in which freelance jobs are handled, often, however, for a specified, longer time span. While this setup excludes perks such as holiday pay, it demands prompt adaptability and comprehensive proficiency in your tech stack. Plainly stated, the prime benefit that makes it alluring is the substantially higher earnings.
Are you inquisitive how freelancing can lead to a higher level of income? A simple computation will reveal that someone earning £70-80k could easily secure a contract paying £400-500 a day. This implies lower tax payment and a much higher yearly income, courtesy of the different corporate structure.
Inside the scope of contract work, a standard stint at a company could stretch anywhere from 6 weeks to 6 months. After your tenure on a project is concluded, you adjust your strategy, modify your LinkedIn profile to ‘open for work’, engage with agency recruiters, and state your daily rate to be paired with potential roles. It’s akin to usual methods of finding freelance work, except here you’re scouting for your next contracts regularly.
One key point to underscore is that like other freelance jobs, contract work is not shielded from market fluctuations. A perfect illustration of this is the COVID pandemic which caused a notable shift in the demand for UK software engineer contracts.
This guide doesn’t offer tax or legal advice. Instead, it serves as a primer on contracting experiences. Also, these contract insights mainly apply to individuals established as a ‘limited company,’ yet also hold relevance if you are contracting as an umbrella company or a sole trader.
Pros and Cons of Contracting in the UK
Benefits of Contracting
Taking on the role of being your own boss, with flexible working hours, is a major advantage of contracting. You’re not obliged to be available round the clock, and company off-sites are generally not required. Other perks encompass unrestricted holiday access, the choice to work extra on weekends for bonus income, quick contract grabbing, exposure to fresh technologies and modern working methods, and evasion of performance evaluations.
Drawbacks of Contracting
Despite the draw of heightened job flexibility and financial gains, the journey does present numerous challenges. Dealing with legal and tax matters in a correct manner can be taxing – hiring an accountant becomes a necessity here. What’s more, there is no sick pay or benefits coverage like insurance or gym, and applying for mortgages becomes notably convoluted.
Job Stability & Taxes in the Contractor Role
Permanent employees often equate contract work with unstable job security. Yet, the actual scenario can be quite different. The capacity of contractors to promptly secure new roles effectively nullifies job insecurity apprehensions. The only blip observed recently was during the initial COVID lockdown.
As far as taxes are concerned, IR35 is a critical tax law all contractors must be familiar with. It’s imperative that every contractor possesses an in-depth understanding of IR35 taxes. Managing expenses and tax-deductible items are also part of the contracting realm.
Costs related to the business are usually tax-deductible, but contrary to what many contractors might suggest, food isn’t. Grasping VAT rules, setting up as a limited, umbrella, or a sole trader company, starting a business bank account, and getting insurance are other crucial steps to take before you set off on your contracting voyage.
Contracting Rates & Skill Requirements
An elementary but critical factor to comprehend before venturing into contracting involves getting accustomed to the standard contractor day rates, typically floating between £300-500 based on location.
As for skills, proficiency in distinct languages and frameworks make a contractor more desirable to recruiters. Mastery of tools like git, Jira, Figma, or Sketch also bolsters your market relevance. Keep in mind, however, that the skill level required to secure a contract role isn’t as high some imagine it to be.
Finding Contractor Positions & Tips for Success
If you’re questioning how to acquire freelance clients or new contract roles, turning to recruiters and using platforms like LinkedIn is advisable. The process might entail frequent communication with recruiters, agencies, and hiring managers, but it’s an invaluable part of the journey.
Creating a concise yet impactful CV, knowing the right timings to hunt for new contracts, keeping updated knowledge of fluctuating IR35 laws, and honing negotiating skills are other critical tips to consider.
Lastly, switching from a permanent role to a contractor one (or vice versa) involves weighty contemplation, particularly concerning legal implications and comparative benefits.
Wrapping Up
Whether you’re a digital nomad eager to embrace software engineering contracting in the UK or a remote worker looking to transition from a permanent role, this guide serves as your comprehensive handbook to navigating this enthralling and rewarding path.
Remember, the journey to secure the most rewarding freelance jobs in London or elsewhere hinges on thorough research and a clear understanding of the contracting realm. So, whether you’re learning how to freelance effectively or just exploring how to find freelance work efficiently, this guide provides you with all the insight you need!
The question now is, are you prepared to step into the intriguing and captivating world of software engineering contracting in the UK? A world filled with potential awaits, and your journey is about to commence!
