* Do I have to set up a company? If so, do I become a director, do I need other directors, how much does it cost?
* Can I sign on for the periods I am not working?
* What is the typical daily rate? I know this depends on my skills, but the bottom line is that I have stong Firebird and InterBase SQL skills, and they are desperate for someone with these skills.
* Obviously we need to agree tems. Is there a standard contract, or do I need a lawyer to draw up a contract?
You don't *need* a ltd co if you are direct to the client (ie without an agency) but it can be more straightforward. No agency will deal with you unless you incorporate.
You can do it yourself with a little research: you download the forms and articles from companies house website, make yourself director and normally add spouse as company secretary and co-director. Issue a share capital of 100 £1 shares and buy one each. You pay £20 to companies house. If you can't be bothered you can buy a ready-formed company ("off the shelf") for around £100 and change the name to one you like.
You *can* sign on for periods out of work because you are not self-employed you are employed by your company. It is a difficult thing to get across to the benefits agency, but if you are put on "short time" by your company as there is no work, you are available for work and can claim. It's not something I've ever done, but know some contractors who did when they were without work for long periods.
Typical day rate varies hugely with location, skillset, experience, sector, time of month, etc. Have a look at
http://www.jobstats.co.uk/jobstats.d/Rates.html for your skills and the median rates. The 25% rates will be for financial sectors and 10% rates for special combinations of skills/market knowlege. Scotland is generally lower rates, though your skill may be specialist enough to not make a difference.
Contracts: DON'T accept a contract given to you by the other party ESPECIALLY if that party is an agent. If you go direct, join the PCG and use their draft contracts (free and legally vetted). If you don't go direct, join the PCG and get one of their legal suppliers to vet/modify the contract in your favour. Remember you are not an employee and the law expects your company to look after itself, and you. Either way, you should join the PCG to get tax investigation insurance, it's not expensive.
You can't really be exempt from IR35 anymore.
You certainly can if your working conditions are correct. Chris's description of remote working, specialist subject, etc, definitely sounds more like freelance than employee to me.
there's new legislation in the budget "income splitting"
That was postponed because the revenue made a pigs ear of it, so was dropped from the budget.
The revenue's view on IR35 can be found at:
Do not take the revenue's view at face value. It is heavily biased. Take specialist advice or read around the subject. Do not beleive what an accountant tells you - take advice from a tax specialist (eg through the PCG)
VAT: you need to register for VAT if you turn over more than a set amount per year or expect to. The threshold is in the £50k region. It currently takes around 3 months to get registered. Flat rate VAT is normally a good idea but you don't save all the amount indicated above because you can't reclaim VAT on things you pay for, and as a start-up you will need to pay for things. You normally end up slightly better off on the flat rate.
considering how little tax you'll pay on the income.
You pay about the same tax as anybody else. The company's profits are subject to corporation tax and your pay will be taxed. If you take a proportion out as dividends, you still pay tax but save national insurance. If you take the umbrella route, you will pay MORE tax + NICs on the day rate because you have to pay employer's NICs as well as employee's NICs plus a percentage to the brolly.
Finally: contracting is highly recommended: you are in control of your own career, you are your boss, the expert consultant, etc. Go for it.