Airline Pilots have always had that element of freedom through the career choice they made, all those courses, theory and practice time in the air grinding their way through to attaining their commercial pilot’s licence. However, Airline Pilot Contractors, or ‘Independent Contract (IC) Pilots’ as they are more commonly referred to, really do have an interesting life, with demand for their services increasing.
CTC Aviation announced at the end of 2010 that it has received requests from its client airlines to train over 360 new pilots to be ready in time for the 2011 summer season. Since January 2011, world-leading airline pilot training company CTC Aviation Group plc has seen a dramatic increase in the demand for pilots from client airlines suggesting a substantial industry recovery.CTC also recently announced an agreement to recruit in excess of 400 pilots for flydubai – Dubai’s new low-cost airline – over the next 3 years.
So what are the advantages and disadvantages of being an Independent Contract Pilot?
- Personal Freedom to choose when and where you work -Some contracts can range from two months to two years, giving you the opportunity to choose how long you wish to contract for that company.
- Trialling different companies -Just like planes, not all employers are the same. Contracting means you get the chance to test out different companies before finally committing to one.
- Worldwide opportunities – A fantastic way to see the world, be prepared though that within the first year you will need to be on standby for the oddest hours of work, contractors often don’t get the pick of the crop when it comes to locations or routes. You’ll also have to be prepared to move at fairly short notice.
- Higher rates of pay – Although long-term benefits may be higher for employed pilots, independent contract pilots can often earn more money.
- The way in – Sometimes working as an independent contract pilot is the only realistic route into working for a specific company.
- Opportunity to build up contacts – Working for various companies will guarantee you a strong network of contacts.
- Ongoing demand for work – Due to the economy and the long-term financial commitments that come with hiring permanent members of staff, some companies are reluctant to hire full-time pilots which have to lead to an even stronger demand an increase in daily rates for independent contract pilots.
Operating through your own Limited company as an Independent Contract Pilot
Independent Contract Pilots have the trading option like any other contractor of either working through an Umbrella Company or through their own Limited Company, which any accountant will tell you is the most tax efficient way possible. However, working through your own Limited Company does come with a certain level of responsibility and administration, but speaking to our contractor clients, of which there are over 15,000 all of whom work through their own Limited company’s, all agree it’s worth the effort and very few (if any) return back to using an umbrella, so it’s obviously not that difficult.
Advantages of trading through a Limited Company
- Higher take-home pay – You’ll typically take home around 75% – 80% of your contract by working through your own limited company, you can take home as much as £13,000 per year more on a £300 daily rate compared with using an Umbrella Company.
- Claim on a wider range of expenses – Training courses, laptops, pilot supplies, uniforms, meals and much more, can be claimed as an expense. Visit our Contractors Guide to Expenses for more information.
- Entitled to the Flat Rate VAT scheme – The Flat Rate VAT scheme can generate thousands of pounds of extra profit per year, with most contractors choosing to apply for this VAT scheme. Visit the following page to read more about the Flat Rate VAT Scheme.
- Complete Control of your Business – You keep complete control of your financial affairs meaning you do not have to risk your money with any third party administrator or umbrella company.
- Ease of use – Running your own business isn’t difficult; submit a spreadsheet to your accountant – just like umbrella time-sheets and expenses. Working through your own limited company does require a certain level of admin commitment but typically most contractors tell us they spend around 15 – 20 minutes per month managing their company’s admin affairs.
- Greater opportunity for tax planning than PAYE Umbrella – It goes without saying that working through your own limited company is a most financially rewarding way to operate, which is only fair bearing in mind the extra responsibilities and loss of full-time employment benefits.
- Accountancy fees are often less than Umbrella Company fees – It seems strange but it’s true, many accountants charge less than umbrella companies, indeed SJD Accountancy offers one of the lowest all-inclusive fixed fee accountancy services in the UK starting from £120 plus VAT per month. Check our packages for more detail. Visit the following page for more information on Why clients choose SJD.
Disadvantages of trading through a Limited Company
- A certain amount of paperwork involved – As mentioned above, there is about 15-20 minutes of administration work required per month, not much more than that of an Umbrella Company.
- Accounts need to be filed every year – You have to file your accounts at Companies House each year, which will be on public record however your accountant will help with this. You will also have to file accounts, company tax and corporation tax calculations with HM Revenue and Customs every year, but again your accountant will help with this.
- Costly if contracting for a short period of time – Can be costly if you have a short-term contract (anything less than a couple of months but it does depend on your daily contract amount) then decide to go back to permanent employment as you will still be required to submit end of year accounts.
- Not ideal for contracts less than £25,000 per year – This is only a general rule, and in some circumstances, depending on the contract, it may be more beneficial trading through a Limited Company. We would recommend contacting an accountant and asking them for their advice. For further advice contact SJD’s New business team using the form below or book a free one to one meeting.
Finding work as an Independent Contract Pilot
The best way of finding contract work as a Pilot is through using Recruitment Agencies specialising in Aviation careers, such as:
These companies upload contractor positions for some of the top Airline companies, from British Airways to Emirates Airlines to Easy Jet. Always ensure that your CV that is uploaded with ‘scannable’ keywords and industry buzzwords for your particular industry, otherwise your CV might not be found. Visit our CV Keywords and Writing your CV page for more information.
Forums are also a great way to get ‘word of mouth’ contracts from people within the industry themselves; it also brings you up to speed on the latest news within the Airline Industry. These are quite popular forums but are very US focused: Airline Pilot Forums and Airline Pilot Central.
Alternatively, you can try going directly to the source. This isn’t the easiest of options, but using social network sites such as LinkedIn are a clever way of finding a point of contact within any company to get a telephone number or email address to send over your CV.
Knowing the airlines who currently have the highest amount of buzz is great for knowing who has the highest hiring opportunities, with companies such as FedEx hiring approximately 250 pilots so far in 2011, and still going.
We hope the above information has been useful. For more information on Contracting through your own Limited Company contact a member of our New BusinessTeam using the form below.