Sole trader/paye or umbrella company?

scfc_151

I currently work full time in the NHS as an anaesthetic technician and am thinking of doing some extra work through an agency on a day off.

Ive had lots of conflicting advise on setting up as a sole trader, getting paid through an umbrella agency or paye.

I dont want to get hammered on tax and dont mind completing tax returns. I may need to claim expenses such as travel costs etc. Some friends at work just get paid through the agency and get paid holiday pay and dont worry about tax where as others do a tax return at the end of the year and claim loads of expenses.

Can anyone advise the best way to go?

Thanks

ableandy

scfc_151, every individual will be unique.

If you go for the PAYE route then you will need your new job to be taxed at BR/D0 (depending on your salary level) that way your tax free allowance would be on your main salary. You can complete a form 87 instead of doing a self assessment form:

http://www.hmrc.gov.uk/incometax/how-to-get.htm


If you go through an Umbrella Company I do not believe you will be any different to the above although they may charge a fee, but they know what they are doing and will help you maximise your allowances:

http://www.contractorumbrella.com/expenses.html

scfc_151

Ive been told by the agency I plan to work for that they dont accept sole traders only ltd companies or umbrella companies.

I got some advise from an accountant who recommends going as a ltd company and paying 20% corporation tax and no national insurance whilst offsetting expenses etc.

Is there a minimum I need to earn to do this? As its only a day a week or even fortnight ill be working because I have a full time NHS job ill only be putting between £3-5k a year through the business.

getmore4less

what sort of work?


You might be better just sticking with the Bank.


For that amount of work ltd will be relatively expensive unless you do your own accounts, and umbrella margin will be significant if they charge a fixed amount per week.

IYKWIM

scfc_151 wrote: »

Ive been told by the agency I plan to work for that they dont accept sole traders only ltd companies or umbrella companies.

I got some advise from an accountant who recommends going as a ltd company and paying 20% corporation tax and no national insurance whilst offsetting expenses etc.

Is there a minimum I need to earn to do this? As its only a day a week or even fortnight ill be working because I have a full time NHS job ill only be putting between £3-5k a year through the business.

Rule of thumb;
<25k - umbrella
25k> - Ltd

It also depends how long you plan to remain a non-employee.

mrods

ableandy wrote: »

scfc_151, every individual will be unique.

If you go through an Umbrella Company I do not believe you will be any different to the above although they may charge a fee, but they know what they are doing and will help you maximise your allowances.

If you do choose umbrella, in order to claim travel and subsistence you would need to ensure you were eligible to claim them, it is not a given for all contractors. They have downloadable guides on their site that you should have a look at - apologies I cannot post links yet...