Quick IR35 question

[Countdown]

If a contract is deemed inside IR35 what are the pros and cons of

(i) being employed directly by the Client; or
(ii) being employed via an Umbrella company

Thanks

[XJ75]

Sometimes umbrella companies have pension schemes that you can take part in (mine does). But the downside is that you pay them a fee (I pay £95 a month + VAT), whereas presumably direct through the client is free.

[Mr Pointy]

You'd probably get a answer on the ContractorUK forums:

https://www.contractoruk.com/

[85Carrera]

XJ75 said:

Sometimes umbrella companies have pension schemes that you can take part in (mine does). But the downside is that you pay them a fee (I pay £95 a month + VAT), whereas presumably direct through the client is free.

What do you get for that £95+VAT? A direct debit set up for you?

[Countdown]

Mr Pointy said:

You'd probably get a answer on the ContractorUK forums:

https://www.contractoruk.com/

Perfect - thanks

[parabolica]

85Carrera said:

XJ75 said:

Sometimes umbrella companies have pension schemes that you can take part in (mine does). But the downside is that you pay them a fee (I pay £95 a month + VAT), whereas presumably direct through the client is free.

What do you get for that £95+VAT? A direct debit set up for you?

They handle your payroll, tax, making it more hassle free for the individual.

[hyphen]

Mr Pointy said:

You'd probably get a answer on the ContractorUK forums:

https://www.contractoruk.com/

Or just typing the question into a search engine...

[XJ75]

85Carrera said:

XJ75 said:

Sometimes umbrella companies have pension schemes that you can take part in (mine does). But the downside is that you pay them a fee (I pay £95 a month + VAT), whereas presumably direct through the client is free.

What do you get for that £95+VAT? A direct debit set up for you?

As someone said above they do full payroll. My client pays them my daily rate, they deduct employers NI, employees NI and income tax, pay some contributions into their pension scheme and then send me the net result. You also get things like liability insurance included too.

Before the IR35 changes came in, if you wanted to be a contractor through PAYE you didn't have the option of going direct to the client (you might still not have that option for some clients), so using an umbrella company was the only option.

[CzechItOut]

The main difference IMO is the rate. If you are employed directly by the client you generally have to fit in with the organisation's pay grades, whereas via a Ltd or umbrella you have more scope to negotiate your daily rate.

So for example, if the daily rate is £700, the client is unlikely going to pay you a salary of £150,000 (700 times 5 times 43).

If you can get a salary as a direct employee which is comparable to an equivalent of a daily rate, then that is generally better as from my discussion with umbrella companies they also deduct an "employers fee" which is effectively to cover their Employer's National Insurance, on top of their own fee/margin, although I was quoted £25 a month.