Umbrella or Limited: what’s the best solution for you?
Whether you’re a seasoned contractor or new to the idea, you may be confused as to whether you should use a limited company or an umbrella company to manage your affairs.
The are a number of advantages to using an umbrella company. You won’t need to manage payroll and accounts as you effectively become an “employee” of the company.
You’ll get things like Statutory Sick Pay and Maternity and Paternity Pay. It’s ideal if you’re just contracting between full-time jobs and if you earn less than £25,000 a year.
It is, however, the most expensive option. In return for your easy to administer salary, you will pay more in tax and National Insurance. You may as well be on a payroll. You are also dependent on the company to collect your money from your client and then pay you.
Setting up a Limited Company is the most tax efficient way of working. You’ll be able to claim more expenses, you’ll be eligible for Flat Rate VAT. You’ll keep control of your finances and won’t have the risk of using a third party.
There are strict rules governing contractors setting up limited companies. You must be a genuine, one-person limited company and not a 'scheme' dreamed up to help you pay less tax.
Want to know which one is best suited to you?
Call us for an assessment or join us today for a 90-day money back guarantee trial. Your tax will never be in better hands.