Contract via own business or umbrella company?

2Confuddled

Son is currently in his final year at university and has been offered a contract for two days a week at £125 a day. This would only run until next summer and there would be time off round his exams... so we aren't talking a huge amount of money.

I am aware he could set up his own business which may, or may not, be useful post graduation, or there are umbrella companies... either way it seems the outgoings would probably eat up his income.

Does anyone have experience of umbrella companies? How do you find a good one? How much is it likely to cost?

If he went self employed, how would the costs compare. I have no idea where to start and he has even less. From what I have seen so far, I am starting to wonder if it's actually worth it.

I am grateful for any guidance people can offer

Comms69

So he wouldn't even owe any tax?

2Confuddled

No. But I assume he would need to get liability insurance and convince HMRC that he really wasn't earning enough to pay tax.

indianabones

Honestly for that rate of pay it simply isn't worth using an umbrella company. I would advise anyone contracting and making under £300 a day to create a limited company. Once it get's past £300 then you can start to think about an umbrella company.


I have spoken to accountants before and they've actually advised people not to even think about umbrella unless you're absolutely raking in the money and are bone idol lazy. Him working only a handful of days a month, he should have plenty of time to do the paperwork.

getmore4less

Why can't they do PAYE?

happyandcontented

indianabones wrote: »

Honestly for that rate of pay it simply isn't worth using an umbrella company. I would advise anyone contracting and making under £300 a day to create a limited company. Once it get's past £300 then you can start to think about an umbrella company.


I have spoken to accountants before and they've actually advised people not to even think about umbrella unless you're absolutely raking in the money and are bone idol lazy. Him working only a handful of days a month, he should have plenty of time to do the paperwork.

Sorry, but I don't think that advice is correct. The more money you expect to be paid the better it would be to become a Ltd company rather than use an umbrella company. That is current advice from our Accountants.

2Confuddled

getmore4less wrote: »

Why can't they do PAYE?

Why can't who do PAYE? Sorry I don't understand

2Confuddled

happyandcontented wrote: »

Sorry, but I don't think that advice is correct. The more money you expect to be paid the better it would be to become a Ltd company rather than use an umbrella company. That is current advice from our Accountants.

So he would be better in an umbrella company?

getmore4less

2Confuddled wrote: »

Why can't who do PAYE? Sorry I don't understand

The real employer.

Umbrella is just employed under PAYE with someone taking an extra cut.


if self employed requires ltd. that may cost more short term but if long term he will be contracting for his career it may be worth setting up and getting used to operating under that scheme.

2Confuddled

getmore4less wrote: »

The real employer.

Umbrella is just employed under PAYE with someone taking an extra cut.


if self employed requires ltd. that may cost more short term but if long term he will be contracting for his career it may be worth setting up and getting used to operating under that scheme.

I don't know why they don't want to put him on payroll. Short term contract I suppose

happyandcontented

2Confuddled wrote: »

So he would be better in an umbrella company?

It would be simpler and is usually advised if the contracting period is for a relatively short time.