Limited or Umberalla

Limited or Umberalla

Author
Discussion

Gaffer

Original Poster:

7,156 posts

284 months

Friday 13th February 2004
quotequote all
After my little incident the other week I have been put forward for a 3 month contract but I need to be a Limited Company or go via an Umberalla company.

I have NO idea what they are and the implications of both. Which is the best and easiest way to get going...?

Thanks....
Claire *a little ray of sunshine*

Plotloss

67,280 posts

277 months

Friday 13th February 2004
quotequote all
Depends if you are going to stay as a contractor once this 3 month term ends.

If you aren't and prefer permie work then setting up a Personal Service Ltd Company is probably going to be a bit of overkill.

An Umbrella will end up costing you a little more but is overall less hassle for such a short term.

Gaffer

Original Poster:

7,156 posts

284 months

Friday 13th February 2004
quotequote all
Ok thanks.

If I was earning say £14 per hour how much would the umberalla company take off me..?

Claire

Plotloss

67,280 posts

277 months

Friday 13th February 2004
quotequote all
Depends on the umbrella firm as to what they charge for admin.

Has your agent suggested someone?

A query perhaps more for Eric Mc, but does being part of an Umbrella allow you to swerve IR35?

This will have a bearing also, because if you can avoid IR35 in an umbrella then you are better off due to reduction in NI paid.

Gaffer

Original Poster:

7,156 posts

284 months

Friday 13th February 2004
quotequote all
IR35...?

I think I have some reserch to do.
Will mail him...thanks Matt.

Claire

Plotloss

67,280 posts

277 months

Friday 13th February 2004
quotequote all
IR35 is the law brought in to stop primarily IT contractors paying themselves small salaries and then drawing the rest as dividends that attract no NI.

Browns take on it was if it walks, talks and smells like a duck its effectively a duck so tax it like one.

JonRB

76,106 posts

279 months

Friday 13th February 2004
quotequote all
Using an Umberella Company has no bearing on IR35 at all, unfortunately, otherwise we'd all be using them.

The Inland Revenue will look at the notional contract / relationship with your end-client. If it appears to be disguised employment then they will try to tax you as such (Claire: that's what IR35 is all about), regardless of your facade be it Ltd Co or Umberella.

If Claire is working like a temp and is used to being an employee then she's unlikely to be too bothered by IR35 anyway as she'll be used to paying NI and Income Tax on earnings.

chim_girl

6,268 posts

266 months

Friday 13th February 2004
quotequote all
My other half is in IT, he used a company called Computer Giants as the umbrella when he did a spell as a contractor.

I can't remember how much they charged, from memory it wasn't lots. If you need more info I can get it from him over the weekend.

Edited 'cause I'm having a blonde day

>> Edited by chim_girl on Friday 13th February 13:54

m-five

11,437 posts

291 months

Friday 13th February 2004
quotequote all
Gaffer said:
Ok thanks.

If I was earning say £14 per hour how much would the umberalla company take off me..?

Claire



Have a look at someone like GIANT who charge me £28 per week to do my PAYE.

Don't forget that you will be liable for EMPLOYER'S as well as EMPLOYEE'S NI contributions, and while employee's contributions are limited, employer's contributions aren't.

You can also claim tax relief for expenses such as subsistence, accommodation, travel, etc which means that the expenses are deducted from your gross before tax & national insurance are calculated, and then added back in to calculate your nett!

>> Edited by m-five on Friday 13th February 12:52

Zorro

4,474 posts

289 months

Friday 13th February 2004
quotequote all
The difference was night and day for me, I had 3 years with my own Ltd company and then switched to a composite company (after IR35) which I think is the same as an Umbrella....they only charged 75 a month and then only if I was working. Small firm so I dealt with the same girl each time, they couldn't do enough for me.

I went form having to deal with a shedload of paperwork..VAT returns...NI/PAYE expenses etc to just phoning in my hours and expenses et voila money paid straight into my account.

Top banana. JC

dimmadan

701 posts

270 months

Saturday 14th February 2004
quotequote all
this has been covered before. I am under an umbrella company, I use www.fpsgroup.co.uk to run the set up and they charge 5%. no set up costs.

www.fpsgroup.co.uk/fpsltd/presales3.html

>> Edited by dimmadan on Saturday 14th February 02:21

JonRB

76,106 posts

279 months

Saturday 14th February 2004
quotequote all
I think it is fair to say that for short term contracting work, an Umberella company reprents a convenient way into it. However, you should be aware that if the company goes titsup.com then you're likely to lose any money owing to you. There have been several cases in the past year or so.

For longer term / higher value contracting or consulting, particularly if you have good confidence in being outside IR35, then little can touch having a Ltd. Co.
If you have a good accountant then the administration work you need to do is fairly negligable.

monker

32 posts

282 months

Thursday 19th February 2004
quotequote all
Hi claire,

I work for an IT contracting agency and have the same question asked to me every day, for the 3 month term the Umbrella is the best way to go, there is a company called Parasol IT (web addy is www.parasolIT.co.uk) and they do a very good package that will take into account all of the day to day expenses, mileage etc plus subsistence allowances lunches refreshments etc in doing so reduce the amount you are taxed on. for a miserly weekly fee of £11.75.. no set up fee either..

surely the cheapest in the business and i know of at least 15 contractors of mine who use them after previously having thier own Ltd Companies..

Gaffer

Original Poster:

7,156 posts

284 months

Friday 20th February 2004
quotequote all
Thanks for the replies everyone. I will be going with an UC if I ever get a job.

I was offered one yesterday but the moeny wouldnt have covered travelling etc. I felt so bad when I had to turn it down.



Claire

barry sheene

1,524 posts

290 months

Friday 20th February 2004
quotequote all
don't forget also that Mr Brown is doing his best to kill off small businesses with punitive tax measures by introducing the new IR591 tax scandal.....

www.ir591.org.uk/

eric mc

122,856 posts

272 months

Friday 20th February 2004
quotequote all
I would advise people not to panic just yet on this IR5.91 issue. It is not at all clear what he intends to do. All should be revealed on March 17 - and then, of course, you CAN panic.

The main issue seems to revolve around the freedom of directors/shareholders of ordinary, normal, trading companies to continue to draw income in the form of dividends. If YOUR company is in a position to draw dividends NOW, it might be a good idea to see if it is worth making provisions now rather than later. However, drawing dividends is already fraught with legal and tax limitations so do be careful if you decide to draw a dividend now.