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...]
Freelancers, temporary workers and contractors love the lifestyle and sense of freedom that comes with being self-employed. Choosing how to trade as a contractor is an important part of freelancing, and the choice has to be considered, between:
Some contractors are happy to take responsibility for raising invoices, completing the correct HMRC tax forms and keeping detailed records of their business activity.
Unlike permanent employees, contractors face various tax implications which can affect exactly how much they take home in their pay packet each month.
Most contractors look for a way of reducing their tax bill, where possible, and rely on the professional advice of their umbrella company.
It is possible for contractors using an umbrella company to off-set some of their tax liabilities by claiming for legitimate business expenses.
The better umbrella companies, have a team of expert tax advisors on hand to ensure their contractors know exactly what expenses can be claimed and so take home the maximum net pay legally allowed by HMRC.
Contractors can sleep easy knowing they are protected from any future HMRC investigation.
The other key benefit provided by an umbrella company is that they offer self-employed workers with a ready-made limited company through which they can operate multiple contracts.
The umbrella company does all the administration and paperwork and only charges when the contractor is working, so in between contracts there are no worrisome bills.
The benefit from using an umbrella company is that the contractor saves time and worry on all the complex administration usually associated with running a limited company, including:
All legitimate umbrella companies provide additional benefits such as holiday and sick pay. Umbrella companies can also give the contractor access to other benefits not readily available to them, such as pension schemes, private healthcare, life and critical illness insurance and childcare vouchers.
Umbrella companies provide Employer's Liability and Public Liability insurance cover within the fixed price, and most also include Professional Indemnity Insurance, which helps to cover the contractor in the event of any legal cases being brought against them in respect to the services that they provide to their clients.
By registering with an umbrella company, a contractor becomes an employee of the umbrella company, while retaining the desired flexibility to find and choose their own work, clients, rates, terms and conditions.
Umbrella companies help contractors to save time on administration, time which could be better spent by most contractors. Umbrella companies are a far simpler way for contractors to trade whilst reducing their tax burden to the lowest possible level.
An umbrella company is designed for today's modern contractor who has better things to do after a hard day's work than sit in front of a computer and struggle with spreadsheets, forms and figures.
What about Expenses When Working Abroad? See what our Experts have to say.
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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.