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...]
An umbrella company acts as an employer to individuals who work in temporary roles. It enables them to enjoy the best of both worlds. They benefit from a higher rate of pay than as a permanent employee yet still get all the benefits of working through a big company. Things like sick pay.
Yes, if they use an umbrella company. You'll get the freedom and flexibility afforded by contracting plus all the benefits and convenience of an umbrella company employee.
There are both financial and time management benefits of working through umbrella companies. Firstly the contractor is entitled to a higher rate of pay due to the agency uplift normally provided by the agency. Secondly you can offset business expenses that are wholly and exclusively related to the work that you do against your tax.
In all instances these are expense or portion of expenses that are within HM Revenue and Customs guidelines.
Expense payments will usually be made to employees (contractors) at the same time as salary payments. Most common expenses are travel, subsistence (lunches) and phone calls.
This in essence decreases your taxable salary and therefore reduces your PAYE and NI taxes. Contractors even get a higher net pay!
The time management saving and satisfaction comes through the umbrella company service ensuring that all your tax payments are made.
The service they provide is that you are covered with a full suite of professional insurances: employer's liability, public liability and professional indemnity cover.
Your umbrella company will then issue invoices on your behalf, collect payments from your agency/client, pay your PAYE tax and NI contributions to HM Revenue and Customs and then pay your net pay straight into your personal bank account.
Because an umbrella company is the easiest and most simple way to go contracting these days. You get this fantastic service but there are none of the administrative and regulatory hassles associated with self-employment or running your own limited company.
It is that simple! And you even get a higher net pay!
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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.