Pay via Ltd Company, Umbrella Company or direct PAYE advice

DullGreyGuy

NannaH said:

My husband has just finished a temp contract and went with Umbrella.  He ended up with around £25 (from £35) an hour after tax/ double NI/ umbrella fees. 

I say around £25 because he was never paid the same amount twice!  

Was that with him getting paid holiday or unpaid holiday? Any pension contributions? My assumption would be that its waiving paid holidays.

Huynha said:

NannaH said:

My husband has just finished a temp contract and went with Umbrella.  He ended up with around £25 (from £35) an hour after tax/ double NI/ umbrella fees. 

I say around £25 because he was never paid the same amount twice!  

That's interesting

The likes of Parasol have a free basic calculator on their website if you want to see what the monies will be via an umbrella... the only bit that varies is their fee and even then its all within a tight window.

NannaH

Yes,  no holiday pay.  It was a 3 month contract. 

taper

We spoke to our accountant who recommended using an umbrella company saying the benefit of Ltd company are lost as it is within IR35 and we also lose the admin side of VAT returns, company accounts etc.

We have contacted a couple of umbrella companies for quotes. We are keen to contribute towards a pension to get the tax benefits but they have recommended salary sacrifice to a private pension as opposed to enrolling in their workplace pension. Does this sound right? Are they just trying to save costs from employer contributions (or would we ultimately pick that up anyway?).

Grumpy_chap

taper said:

We spoke to our accountant who recommended using an umbrella company saying the benefit of Ltd company are lost as it is within IR35 and we also lose the admin side of VAT returns, company accounts etc.

We have contacted a couple of umbrella companies for quotes. We are keen to contribute towards a pension to get the tax benefits but they have recommended salary sacrifice to a private pension as opposed to enrolling in their workplace pension. Does this sound right? Are they just trying to save costs from employer contributions (or would we ultimately pick that up anyway?).

Yes, through UC, the best way to contribute to the pension is via SS.  You would pick up the employer contributions anyway.

When did you speak with your Accountant?
It is just that the Chancellor's statement on Friday last week has changed all the rules for IR35 so you will likely only be inside-IR35 until the end of March next year and then revert to the self-determination.

biscan25

Grumpy_chap said:

taper said:

We spoke to our accountant who recommended using an umbrella company saying the benefit of Ltd company are lost as it is within IR35 and we also lose the admin side of VAT returns, company accounts etc.

We have contacted a couple of umbrella companies for quotes. We are keen to contribute towards a pension to get the tax benefits but they have recommended salary sacrifice to a private pension as opposed to enrolling in their workplace pension. Does this sound right? Are they just trying to save costs from employer contributions (or would we ultimately pick that up anyway?).

Yes, through UC, the best way to contribute to the pension is via SS.  You would pick up the employer contributions anyway.

When did you speak with your Accountant?
It is just that the Chancellor's statement on Friday last week has changed all the rules for IR35 so you will likely only be inside-IR35 until the end of March next year and then revert to the self-determination.

This needs primary legislation to be repealed, and the vote getting through the commons is not a given. People moving from inside IR35 to self-determine outside may look a bit sus to HMRC, and they may investigate.

OP, if you have a choice of Umbrella, I can recommend Fore:two group. They charge £20 a week (for my agency - others may vary), but salary sacrifice contributions are free, whereas some umbrellas charge for making these payments.

biscan25

taper said:

We spoke to our accountant who recommended using an umbrella company saying the benefit of Ltd company are lost as it is within IR35 and we also lose the admin side of VAT returns, company accounts etc.

We have contacted a couple of umbrella companies for quotes. We are keen to contribute towards a pension to get the tax benefits but they have recommended salary sacrifice to a private pension as opposed to enrolling in their workplace pension. Does this sound right? Are they just trying to save costs from employer contributions (or would we ultimately pick that up anyway?).

Salary sacrifice is best, because not only do you save on tax and Employee NI (12%/2% again soon), but also Employer's NI (13.8%), and apprentice levy (0.5%). Makes a £1 of pension contributions cost around 50p for a higher rate taxpayer

Grumpy_chap

biscan25 said:

People moving from inside IR35 to self-determine outside may look a bit sus to HMRC, and they may investigate.

Then, if that is the consideration, I'd imagine people would just leave the current role and start something different with someone else.

There are many cases where the CEST determination is outside but end clients have ignored that and simply had blanket "indie" determinations, which is against the current rules.  In that case, the reversion to "outside" is a correction of an error.

biscan25

Grumpy_chap said:

biscan25 said:

People moving from inside IR35 to self-determine outside may look a bit sus to HMRC, and they may investigate.

Then, if that is the consideration, I'd imagine people would just leave the current role and start something different with someone else.

There are many cases where the CEST determination is outside but end clients have ignored that and simply had blanket "indie" determinations, which is against the current rules.  In that case, the reversion to "outside" is a correction of an error.

Yes, this was certainly my experience - they justified it as they didn't want to take any risk.