Ltd Co, vs Umbrella?

[Hightower]

During my whole career all I've ever been is PAYE but though redundancy I have the chance to accept a contract job and was wondering what the pro's and con's were for each type.

I really want something hassle free.

[John Kennett]

Limited company is likely to cost around £1000 more in accountancy fees than self employed or partnership. Unless you're turning over hundreds of thousands there's no real tax benefit to being a Ltd Co.

If you want limited liability then you can still do that as a partnership (LLP).

Not really sure what you mean by umbrella though!

[ppenman]

Hi, I'm sorry to hear about your redundancy.

I've worked as self employed and under an umbrella company. What I found is that if you are wanting to return to work as an permanent employee it's a lot easier (especially with tax etc) to use an umbrella company. However, if you foresee that you want contract long term then setup a limited company.

By the way, I used GIANT as my umbrella employers. They were ok with me and get one of the best reviews.

Good luck.

Peter.

[Bern Hanreck]

I know very little about this , but you may need to also do a bit of research on " Zero Contract Hours "

......UNISON the public service union - Activists zone

[mitchc]

I've been contracting for the last 5 years, initially as a ltd co. but for the last 2 years under a umbrella.
Try giant or JMK. I've used both and are both fine.
Umbrella basically allows you to claim back some of your expenses against your tax code, therefore taking home more pay.
Also you normally get a higher hourly rate if you are ltd or umbrella as than when paye again meaning you take home more at the end of the month:-)

Give them a ring and they'll explain it all.

[EnglishLes]

I had a month using an Umbrella company then 6 years as a Ltd company (until 2001 so things may have changed a bit since then).

The advantages of a limited company at that time were, you had control over whether you paid dividends (thus avoiding NI) or salary, you could employ family members, buy equipment that could be used at home, have a company car, hold a Christmas celebration (£75 per attendee), pay large amounts into a directors pension,earn interest on VAT, NI and tax to be paid quarterly, hold an AGM at whatever location you chose (these always coincided with my wedding anniversary w/e).

[Ribstore]

Originally Posted by Hightower

During my whole career all I've ever been is PAYE but though redundancy I have the chance to accept a contract job and was wondering what the pro's and con's were for each type.

I really want something hassle free.

Andy, just get some prof advice/do lots of research otherwise you may find yourself back in PAYE land, retrospectively + interest! If genuinely contracting then you will be fine but if simply 'dressing up' a contract of employment as a contract for services, i.e. caught by IR35 (umbrella or otherwise) then HMRC will most likely enquire and, boy, they are like a dog with a bone!

The Revenue are getting much more agressive with tax avoiders (god help evaders), even perceived avoiders are now targeted [e.g. we regularly receive unsolicited letters from HMRC saying 'own up and we will not come after you for unpaid tax'], and, quite frankly, they have seen it all before...AGM's in the Caribbean (misses the only shareholder? Artic Systems case!?), company car (benefit in kind/no doubt the P11d is ignored!), etc

What I do know is that if an artifical avoidance scheme is created then HMRC usually move to close it down, if you have joined up to that scheme, then you are usually left holding the tax baby - umbrella services

Chris

[Hightower]

Thanks for your input guys some useful info there. I think that if I do accept the job I'll go the umbrella route to start off with. It does seem much simpler to use and can have some advantages like have Public liability insurance built in.

[falcon0310]

depends what you do, ive been self emmployed for 19 years, and you dont want hmrc on you pm if you want know more

[SPR]

This is interesting read:

Self Employed Contractors | Your Staff | Clubs & Associations | Information & Advice | RYA

but if in doubt - talk to to a good accountant , or contact Federation of Small Businesses.

regards

S.

[Gerry]

PCG have some very good and helpful information for freelancers/those setting up on their own:

Resources Home | PCG

[Pikey Dave]

I operate in the construction industry as a Ltd Co. I was a Sole Trader for 15 years & went Ltd 3 years ago. I don't take the pi55 with the tax, pay my dues & I am financially better off for it & I can sleep at night. I take minimum wage & the rest as dividends. My accountant is very reasonable, there's a bit more admin regarding filing accounts etc, but not much. I'm happy with it.

[Hightower]

Thanks for your reply's guys. Some very useful info there for future reference. However I took the other job. Less money, paye tax, shorter contract, much less interesting job .....I must be Mad