Freelance Worker: Umbrella Vs Sole Trader

PensionsQuery

I'm currently working through an umbrella company and I'm having nothing but problems. 

The work for the end client would in all likelihood fall into the IR35 rules if a PSC was used, and the client has banned all PSCs anyway.

Strangely, the client is open to hiring sole traders, which I know very little about.

From what I think I understand,, the tax situation between a sole trader and umbrella employee is largely the same (as the business and personal incomes are combined).

Is the option of becoming a sole trader with the client worth investigating further, or are there other pitfalls I'm not aware of that would suggest remaining with the umbrella is better?

badmemory

I see you haven't had an answer yet & suspect it is because of where you have posted.  Can I suggest you post on cutting tax this is more their thing.

PensionsQuery

I thought it more employment related as I think tax-wise they're largely the same, but employment rights/status seems less clear

Grumpy_chap

PensionsQuery said:

I'm currently working through an umbrella company and I'm having nothing but problems. 

The work for the end client would in all likelihood fall into the IR35 rules if a PSC was used, and the client has banned all PSCs anyway.

Strangely, the client is open to hiring sole traders, which I know very little about.

From what I think I understand,, the tax situation between a sole trader and umbrella employee is largely the same (as the business and personal incomes are combined).

Is the option of becoming a sole trader with the client worth investigating further, or are there other pitfalls I'm not aware of that would suggest remaining with the umbrella is better?

Is the option to change from UC to Sole-Trader still an option given you have already commenced working through the UC?
It is not unusual that an assignment is fixed to whatever the first form of engagement is.

DullGreyGuy

PensionsQuery said:

I'm currently working through an umbrella company and I'm having nothing but problems. 

The work for the end client would in all likelihood fall into the IR35 rules if a PSC was used, and the client has banned all PSCs anyway.

Strangely, the client is open to hiring sole traders, which I know very little about.

From what I think I understand,, the tax situation between a sole trader and umbrella employee is largely the same (as the business and personal incomes are combined).

Is the option of becoming a sole trader with the client worth investigating further, or are there other pitfalls I'm not aware of that would suggest remaining with the umbrella is better?

Umbrella is the same as being employed, they will be taking employers NI (about to increase), Apprenticeship charge etc from your day rate plus their charge. Going to Self Employed is likely to at least be marginally better. Obviously some then argue that they are workers and not actually Sole Traders so get additional pay too.