Use Umbrella or Own company for contractor

[onny]

A bit of background. I have dual citizenship (British and Australian). Living and working in Australia for last 6 years. I consider Australia as home.

I have just been offered a 9 months contract (IT) in the UK with possible extensions. I intend to go back to Australia soon after completion of my contract or after 18 months, which ever comes first.

Should I be using a payroll umbrella company or setup my own company to minimise my tax obligations?

The umbrella company charges about 3% but they are willing to provide me with a salary package that will deduct from my pre-tax pay the moving cost for my partner and myself to the UK, monthly accommadation cost for the period of my contract and some subsistant amount for meals etc. I will pay tax and NI for the remaining amount minus their fees.

If I have my own company, can I do what the umbrella company is doing and pay myself travel cost, accommadation and subsistence pre-tax and the rest is tax? Having my own company will mean that I have to have an accountant to file my company return which is not a problem as its still cheaper then the umbrella company charges.

Is what the umbrella company legitimate in paying my costs? Am I allow to do the same if I have my own company?

What should I do?

Edited by onny on Friday 1st February 01:43

[Eric Mc]

A nine month stint is probably not long enough to warrant seting up your own limited company.

Umbrella companies vary hugely in their willingness to sail close to the edges of tax legislation so you have to decide what tax risks you are willing to take.

[onny]

I think Umbrella company is the go then. I'm likely to get work for 18 months but setting up a company and taking the liability for any issue is not worth the 2% fee.

[Eric Mc]

18 months makes the company route a bit more viable though

[Mattt]

Are there any ATO implications? I thought Aussies were taxed on worldwide income, subject to double taxation agreements.