Employment Status

Are you a contractor? If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.

Your employment status will determine the charge to tax on income from your employment or self-employment. It will also determine the class of NICs, which are to be paid.

Umbrella Companies employ you for tax purposes and complete central returns for all their contractors. It's less hassle and more flexible for you but take home pay is typically less than that the limited company option.

The best option for you depends on your plans, 'one off' contract or 'contractor for life'? [Read More...]

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2014 Year of the contractor

2014 – Year of the contractor

As 2013 draws to a close, Umbrella Compare takes a look at 2014 and how the changes economic dynamics mean that 2014 will be the Year of the Contractor.

The Last 5 Years

The last 5 years have been a challenge for the contract market, particularly since 2009 when the number of contract roles and rates paid started to decline. Technology contracts have been fairly stable as companies looked to make process efficiencies and automate to reduce labour costs. There have been 3 main factors that have shrunk the contract market:

  1. Reduced business confidence: companies have loitered and put off making decisions for an extraordinary length of time. The lack of government direction has created a huge amount of uncertainty with the wider European market (Greece in particular) making companies fearful of making the wrong decision. Risk has been a dirty word and reduced risk taking stifles growth.
  2. Banks, Banking and Bankers: It is difficult to comprehend the horrendous situation that was created by the banks. Bizarrely it is the taxpayers, businesses and economy that have suffered and paid for their gross misconduct. Pathetically the banks adopted a sulking child approach after their public trial and strangled the flow of money to businesses in general, especially new business start-ups. A blow for contractors forming their own limited companies who required the financial support to make the leap of faith.
  3. Employment Preferences: Employees preference for permanent employment grows during austerity / recession periods despite the change in dynamics with the UK employment market (30 years ago, freelancers were few and far between, there was a major shift in the use of contractors in 1998, these days contractors, freelancers and temps are a common and essential dynamic of the modern workforce). Most people are prepared to a take a risk to achieve their desires but with the increased inflation rate and uncertainty it is easy to understand why individuals elect for a permanent PAYE role with less pay but increased stability.

GDP 2014

The Next 5 Years

What will the next 5 years bring for contractors? December 2013 economic forecast for the UK certainly paints a positive feature and underlines the opinion and scepticism of our partners and colleagues from the financial markets. Year on Year, unemployment is down, GDP growth is up and inflation is marginally down (though this figure will not allow for the increased fuel rates that have recently been published). Sadly, Government reports are not normally in touch with the common worker and fail to add value/measure/analyse the micro level but they do provide a good general measure of the macro level. The good news is that the positive is also being felt on the streets. People are buying, the housing market is gaining traction and small businesses are talking investment and growth.Someone in the government has done their homework, the shift in lending emphasis is shifting from consumer to business owner, a key milestone as cash flow will be essential to facilitate a rapid return to economic vibrancy.

This is all great news for contractors, especially those who have endured and galvanised themselves in the economic fires of the past half-decade. Companies will grow, specialised skills and project support will underpin that success; 2014 will be the year of the contractor. With the following 2015-2017 likely to build on 2014 with 2018/19 stabilises economic growth and seeing a return to consumer focused government policy.

Umbrella Company or Limited?

So with superb prospects for freelancers in 2014 the only question is whether to choose an umbrella company or a limited company. The great news is that Umbrella Compare is here to support you in getting the right service and solution for your contract.

Have a great 2014. Comments welcome below.

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HMRC Compliance

It's the basics... Compliance with Tax, VAT, PAYE and fiscal arrangements is mandatory for contractors regardless of whether you use an umbrella company or your own limited company.

Incredible then that there are still rogue umbrella companies and limited company accountants who expose their contractors to fraud. Umbrella Compare provides THE solution, we thoroughly vet all umbrella companies and limited company accountants that we list [Read more...].

Umbrella Compare provides a holistic overview of contracting with the aim of helping new and old contractors find the right payroll solutions. Contracting should be about focusing on the contract, not payroll, accounting, HMRC and bureaucracy.