Umbrella Companies - am looking for some advice and guidance
Discussion
Hi,
Long time lurker - irregular poster;
In short, I am currently a fixed-term contract worker (long series of contracts with the same client, that went from initial consultant employment via my Ltd Company which I have subsequently closed, through to Agency employee to Fixed Term with the client directly as things went further away from my initial terms and I like black and white - not grey).
I'm looking at moving on as things with my current client/employer are imploding (and I don't want to be in the building when the roof or floor goes). On the Contract side, as I have an Agency involved (and they need to get their cut) they obviously don't want me to go Fixed Term, so have offered Ltd. or Umbrella Company.
My current position that I am interviewing for next week, which I think I am unlikely to get, is in the £240/day bracket, but the indicative contract length would be 12 months, £23-£26/hr range.
Because of the issues with IR35 - I don't want to go down the Ltd. route, as it is more hassle than it's worth in my line of work (whilst I think I could adhere to a suitable say QDOS(?) approved contract, I'm not sure the Client could etc.) and I like the black/white thing and consistent hassle free income. It regularly happens in my industry that people are employed as a Consultant and it rapidly becomes clear that they are being employed and treated like a regular employee (and hence the grey zone).
Therefore I am keen to go down the Umbrella route, but not having had any experience with Umbrella companies I am looking for some pointers. In short the Agency has several companies that they deal with (they haven't provided me with details yet so I haven't been able to check them out).
I think by going the Umbrella route, I am essentially a fully compliant PAYE employee via the Umbrella Company, who I have to submit my timesheets to and they invoice my Agency who gets paid by my Client? Have I got this right? On the basis of this I am possibly more legit than I need to be, and possibly giving up some of the rate I could earn but doing the right thing?
Any advice would be greatly appreciated as it appears that I am going to need to do this as long as I have an Agency involved.
Long time lurker - irregular poster;
In short, I am currently a fixed-term contract worker (long series of contracts with the same client, that went from initial consultant employment via my Ltd Company which I have subsequently closed, through to Agency employee to Fixed Term with the client directly as things went further away from my initial terms and I like black and white - not grey).
I'm looking at moving on as things with my current client/employer are imploding (and I don't want to be in the building when the roof or floor goes). On the Contract side, as I have an Agency involved (and they need to get their cut) they obviously don't want me to go Fixed Term, so have offered Ltd. or Umbrella Company.
My current position that I am interviewing for next week, which I think I am unlikely to get, is in the £240/day bracket, but the indicative contract length would be 12 months, £23-£26/hr range.
Because of the issues with IR35 - I don't want to go down the Ltd. route, as it is more hassle than it's worth in my line of work (whilst I think I could adhere to a suitable say QDOS(?) approved contract, I'm not sure the Client could etc.) and I like the black/white thing and consistent hassle free income. It regularly happens in my industry that people are employed as a Consultant and it rapidly becomes clear that they are being employed and treated like a regular employee (and hence the grey zone).
Therefore I am keen to go down the Umbrella route, but not having had any experience with Umbrella companies I am looking for some pointers. In short the Agency has several companies that they deal with (they haven't provided me with details yet so I haven't been able to check them out).
I think by going the Umbrella route, I am essentially a fully compliant PAYE employee via the Umbrella Company, who I have to submit my timesheets to and they invoice my Agency who gets paid by my Client? Have I got this right? On the basis of this I am possibly more legit than I need to be, and possibly giving up some of the rate I could earn but doing the right thing?
Any advice would be greatly appreciated as it appears that I am going to need to do this as long as I have an Agency involved.
If you are worried about your working practices being inside IR35 then it is still better for take home pay to operate as a LDT.
You also have one less party getting their hands on your money before it gets to you.
You make a bit extra from the flat rate vat saving
https://www.nixonwilliams.com/net_pay_calculator.a...
I would go Ltd, try to ensure my working practices are outside IR35 & join the IPSE to deal with any (unlikely) tax investigation.
You also have one less party getting their hands on your money before it gets to you.
You make a bit extra from the flat rate vat saving
https://www.nixonwilliams.com/net_pay_calculator.a...
I would go Ltd, try to ensure my working practices are outside IR35 & join the IPSE to deal with any (unlikely) tax investigation.
Agreed. That would be my advice too.
Some umbrellas entice by offering claimed massive tax savings - which is probably because they are operating through some sort of tax avoidance scheme.
I lost a client a couple of years ago who moved from his own limited company to an umbrella that offered tax savings in such a way.
He is now undergoing a massive tax investigation having operated his limited company unhindered for 15 years both in and out of IR35 (depending on the contracts he was operating under at any given time).
Some umbrellas entice by offering claimed massive tax savings - which is probably because they are operating through some sort of tax avoidance scheme.
I lost a client a couple of years ago who moved from his own limited company to an umbrella that offered tax savings in such a way.
He is now undergoing a massive tax investigation having operated his limited company unhindered for 15 years both in and out of IR35 (depending on the contracts he was operating under at any given time).
I have been approached by numerous "tax minimisation" companies.
The schemes all revolve around variations of this.
The "tax minimisation company" invoices your end client for your services.
They charge you 10-15% in fees
Then the rest of the money is yours.
However- The money is setup in a trust scheme. ( Offshore/ Onshore.... whatever nuance they believe gets around the tax rules )
For you to get the money - it is given by the trust to you as a loan.
But - you never ever repay the loan.
You really need to have balls of steel to think you are going to survive a tax investigation.
The schemes all revolve around variations of this.
The "tax minimisation company" invoices your end client for your services.
They charge you 10-15% in fees
Then the rest of the money is yours.
However- The money is setup in a trust scheme. ( Offshore/ Onshore.... whatever nuance they believe gets around the tax rules )
For you to get the money - it is given by the trust to you as a loan.
But - you never ever repay the loan.
You really need to have balls of steel to think you are going to survive a tax investigation.
I worked through www.contractorumbrella.com before I set up a Ltd. They're part of SJD Accountants, PAYE compliant, no funny offshore trusts, loan schemes etc. I'd definitely recommend.
Give them a call, I always found them to be very helpful with any advice etc. No affiliation, just a satisfied former customer.
Give them a call, I always found them to be very helpful with any advice etc. No affiliation, just a satisfied former customer.
Thanks for all the advice and information so far it has been very helpful. One thing I just wanted to clarify - I'm not trying to do this for some sort of tax dodge, exactly the opposite - if I could go fully permenant (which seems to be almost non-existant in my industry now) I would, and I am more than happy to be fully PAYE (hence I have no problem with being Fixed Term currently - which has its amusing downsides when contracts don't get renewed promptly).
Because of the IR35 issues (e.g. HMRC won't make a judgement until the Contract is signed etc.), I just don't want to go anywhere near Ltd. - and am just looking for in the circumstances (of having to go temporary/contract) the most straightforward way of paying my taxes as required and in a compliant manner if that makes sense (and not making efficiency savings etc.).
Because of the IR35 issues (e.g. HMRC won't make a judgement until the Contract is signed etc.), I just don't want to go anywhere near Ltd. - and am just looking for in the circumstances (of having to go temporary/contract) the most straightforward way of paying my taxes as required and in a compliant manner if that makes sense (and not making efficiency savings etc.).
99.x% of umbrella company setups are fine.
The company mentioned above is well respected.
But - there are a few unscruplous companies out there that will try to get you to the tax model I showed above.
If it mentions trusts/ loans etc - avoid like the plaque.
Consider joining IPSE as well - if you are going self employed.
www.ipse.co.uk
The company mentioned above is well respected.
But - there are a few unscruplous companies out there that will try to get you to the tax model I showed above.
If it mentions trusts/ loans etc - avoid like the plaque.
Consider joining IPSE as well - if you are going self employed.
www.ipse.co.uk
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