Have you heard about the advantages of umbrella companies for contractors? Use of umbrella contracts has been increasing since 2000. That was when HMRC introduced IR35 legislation to determine contractors’ employment status and their eligibility to utilise small-company tax relief. Is it for you? You owe it to yourself to consider the pros and cons…
If, after careful consideration, you decide that working through a contractor umbrella company is right for you, we can look after everything – while you focus on the contracting…
To learn more, please call 01242 223 175 or email us
More about contracting through an umbrella company
Choosing between limited company status and working through an umbrella can be as important as the sole trader vs. limited company decision. So what is an umbrella company? Essentially, it provides payroll services on your behalf and invoices an agency, which then invoices your client. When set up correctly, it allows you to enjoy advantages such as these:
- With an umbrella scheme, you face much less administration and fewer distractions from contracting.
- Suitability for short-term contracts.
- Claimable expenses.
- Peace of mind because you comply with Managed Service Companies (MSC) and IR35 legislation.
- Umbrella companies help contractors avoidcosts that, as limited companies, they’d still have to cover when they aren’t contracting.
- PAYE income may make it easier to get mortgages and loans.
- It’s alow-risk way to try contracting.
On the downside, you must consider the following:
- All your income will be as salary. You will almost certainly pay more tax than if you were taking remuneration in the form of a director’s dividend as a Contractor Limited Company – this isn’t automatically an easy route to contractor tax avoidance!
- You can’t reclaim VAT as you would through a VAT-registered limited company.
- Anyone working under umbrella companies in the UK won’t have as much control over their affairs as someone contracting as a limited company.
Is an umbrella company right for you?
Take the first step todiscoverwhether an umbrella company would be right for you. Whether you’re an IT contractor or in another area of contracting, we’ll guide you through the process.
For a no-obligation chat about umbrella companies, please call now on 01242 223 175 or email us