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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When you register with an umbrella company you will pay them (typically weekly or monthly dependant on your contract), in return they will provide a service which includes a number of specific duties that they must complete on your behalf. It's important you understand what these duties are so you know what's going on in the background with your money. Knowledge is you ticket to HMRC tax compliance and hassle free contracting, ensure you read through our articles to keep up to date and aware of your legal requirements.
An umbrella company is a business which helps contractors (individuals working under temporary contracts):
Contractors usually get their contracts through recruitment agencies, which specialise in temporary assignments. They have a list of the many clients who prefer to engage such workers rather than hire full time staff.
When a contractor (also referred to as a freelancer worker or temporary worker) 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, collect the money and pay the contractor their net pay directly into their personal bank account.
All compliant umbrella companies work within the same HMRC guidelines when calculating what tax the contractor should be paying, and most umbrella companies will request receipts from the contractor for any business expenditure they may wish to claim for.
Umbrella companies charge a weekly fee (or monthly fee, if that is the frequency of the timesheet) in return for:
This means the contractor can get on with what they know best and is not stuck for hours, each week, 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.
If the contractor is in any doubt then they should consult their umbrella company for expert guidance. The better, and most reliable, umbrella companies will be able to give the contractor such advice and will have in-house professionals to answer their questions.
An umbrella company service comes complete with a full back-office administration team. An umbrella company is simple, quick and doesn't require much input.
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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.