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...]
Are you new to contracting? heard about umbrella companies but not sure what they are? Here's our quick Guide to Umbrella Companies and Umbrella Company Paperwork.
An umbrella company does three things:
When a contractor uses an umbrella company they become an employee of that umbrella company which then takes care of all the paperwork involved in contracting.
The umbrella company will sign the recruitment agency's contract(s) on behalf of the contractor, invoice the recruitment agency (or in some instances the client directly), collect the money when it becomes due and pay the contractor their net pay directly into their personal bank account.
Sometimes a contractor may be able to claim certain business expenses, which could help them reduce their tax bill, and so take home more money compared to working directly through a recruitment agency.
All compliant umbrella companies work within the same HMRC guidelines when calculating what tax the contractor should be paying, and most umbrella company services will request receipts from the contractor for any business expenditure they may wish to claim for.
Umbrella companies charge a fee in return for:
This means the contractor can get on with what they know best and is not stuck for hours completing complex official forms and spreadsheets.
It is really important that contractors only claim for business expenses which have actually been incurred and which also comply with HMRC rules.
An umbrella company service is like an 'off the shelf' limited company that comes complete with a full back-office administration team, designed for freelance contractors who don't want to go to the bother of setting up and running their own limited company.
Managing your own limited company is time consuming, expensive and complex. Contrast this with the service of an umbrella company which is simple, quick and doesn't require much input from the contractor.
You can compare the UK's leading, vetted, HMRC compliant Umbrella companies here using our Umbrella Company comparison Calculator.
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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.