umbrella company ltd company ????

mundouk

Hi folks,

am about to undertake a contracting role for the first time and was wondering if people could shed some light umbrella company's

i have spoke to few regarding the savings etc but as my role doesnt require much travel and or expenses etc am i really going to gain from the use of one of these companys?
also after a break down of fees etc i couldnt help but notice 2 deductions
for NI. one for employee and one for employer?

should one really contributing twice am awaiting a reply from the company in qeustion but would rather an unbiased answer to the above.

thanks in advance!

Mundo

ali1972

I'm a freelancer who works to contracts and do not use one of these companies (have been freelance for nearly 14 years!) Can't shed light on the NI thing... unless their system treats you as employed? In that case there would be an NI employee deduction and an NI employer contribution but I don't see why you'd be liable for the employer contribution... I have duality of status (it's an anomaly in the entertainment industry) which means the Inland Revenue treat us as self employed for tax purposes but as employed for NI purposes. It's to do with us working to contracts. Whichever company I'm hired by deduct employee contributions from my income at source and make employer contributions themselves on my behalf. I certainly don't have to pay these employer contributions back to them! Actually, I would be financially better off if my NI was treated as self employed as well as my tax but there are upsides too... Are you sure there are any benefits to being part of this umbrella company?

mundouk

Hi and thanks for the reply i truly dont believe i would be better off as
the only expenses really would be petrol of 15 miles a week and havng lunch.

have spoken to another umbrella company who state that its standard practice for me to pay ni employee and ni employer contributions.

to give an example say i earn 630 a week my net take home works out and 437 thats near on 200 pound in deductions.
to me thats sounds like quite a big deduction on weekly basis.
not being a tax and ni expert that seems rather a large deduction

ali1972

Yes it sounds a bit of a rip off to me, even if it is normal practice.

I would definitely just go self employed and deal with it all yourself. You will almost certainly be better off. You will find things other than petrol you can deduct from your gross income as expenses such as any stationery, postage stamps, internet access, proportion of your phone bill, and other utilities (if for instance you use part of your spare room as office space etc) membership of any professional body (such as trade union), any professional publications you read... it all stacks up!

Obviously you will pay Class 2 NI contributions at regular intervals (but it's not that much). Then all these allowable expenses are deducted from your gross income and you will pay tax and Class 4 NI contributions on the rest of the income. I think it's a no brainer - you will almost certainly be better off as self employed. As I said before, I would be better off if I paid my NI as Class 2 & 4 but work in a strange profession where we pay Class 1 and 4. And I'm sure the Inland Revenue would be delighted to get rid of the anomaly as well!

sobek123

Hi mundouk, there's a site called Umbrella Supermarket which lists all the UK based umbrella companies.. rates their services and solutions etc so you can get a clearer picture as to which are the more reputable and reliable ones to use.. Plus which are a total rip off and talking total :mad: lol

:rotfl: http://www.umbrellasupermarket.com/

I've personally used Danbro in the past and crystal umbrella. Both do make you pay ni employee and ni employer contributions. But take a look at umbrella supermarket and see who offers a solution thats more relevant to your situation..

http://www.crystalumbrella.com/
http://www.danbro.co.uk/

m.singh

I work through an umbrella company called myOE which works under a dual employment model this negates the need for expense claims and has retained me around 80% of my earnings – The easiest way to factor in your NI payment is to ask your recruiter for the limited company rate which has the employers national insurance factored in (12.8%) to move from a PAYE to a ltd co rate is difference of 12.8%
myOE have been fantastic to deal with, my account manager in Simon Young has helped clear up many of the questions that come up while contracting – I think their best point of contact is [EMAIL="info@myoe.com"]info@myoe.com[/EMAIL] – flick him an email and he should be able to help you out… hope this helps!

fengirl_2

The double NI payment is correct. You are effectively the employer (who has to pay 12.8% NIC on wages) and also the employee (who is liable to 11% NIC).

schneckster

The OP hasn't actually said what they do. Whether you go self employed or limited can depend on what you're doing as to which one is better for you.

However, if you're looking at umbrella companies, that suggests that a limited company would be better in any case.

So why not have your own limited company? You can get one registered for as little as £30 (+ vat). Corporation tax is due on profits at a rate of 215 (assuming small business rate), and then you have to pay yourself. But most contractors pay themselves a minimum-ish wage and take the rest as a dividend on their shares, reducing their tax bills. You should talk to an accountant about exactly how to do this without falling foul of the taxman, though.

There are more regulations with limited companies than self employed, which is where umbrella companies take the pressure off a little. However, they charge quite a lot for something that, with a little organisation, isn't that onerous.

I'd say it was worth a look.

Schneckster

getyaboogieon

m.singh wrote: »

I work through an umbrella company called myOE which works under a dual employment model this negates the need for expense claims and has retained me around 80% of my earnings – The easiest way to factor in your NI payment is to ask your recruiter for the limited company rate which has the employers national insurance factored in (12.8%) to move from a PAYE to a ltd co rate is difference of 12.8%
myOE have been fantastic to deal with, my account manager in Simon Young has helped clear up many of the questions that come up while contracting – I think their best point of contact is [EMAIL="info@myoe.com"]info@myoe.com[/EMAIL] – flick him an email and he should be able to help you out… hope this helps!

I wouldn't go shouting from the roof-tops about the details of these types of schemes if I were you!

James22

Most Umbrella Companies offer free impartial advice anyway, so it would be worth ringing around a few to compare what each can offer you. Dont forget its not just about expenses, a good umbrella company will ensure you are maximising your net pay and operateing in the most tax efficent way. Also some umbrella companies will offer you free insurance with there service which may help agencies find you more work etc. Danbro did this for me. As schneckster said depending on what you earn, a limited company may be a better way to operate efficently. Theres a lot to think about. Again as I said before, I would recommend rininging around a few as in such a competetive market place they will all be fighting to offer you the best deal.

Alex

TwistedPsycho

mundouk wrote: »

Hi and thanks for the reply i truly dont believe i would be better off as
the only expenses really would be petrol of 15 miles a week and havng lunch.

have spoken to another umbrella company who state that its standard practice for me to pay ni employee and ni employer contributions.

to give an example say i earn 630 a week my net take home works out and 437 thats near on 200 pound in deductions.
to me thats sounds like quite a big deduction on weekly basis.
not being a tax and ni expert that seems rather a large deduction

Are we referring to working for an organisation such as Arise? If we are then do not forget to factor in that they will only deal with incorporated companies, which means you have to set yourself up as a Limited Company and not as a sole trader.

This then also incurs Corporate Tax issues.

I am not going to tell you to incorporate or not as its your choice, however do make sure whether the company you are going to be working with uses a B2B structure or accepts sole traders.