Limited company or Umbrella

[Randsta]

Hi Guys and Gals

I'm thinking of doing some contracting work and was wondering if any of you people experience of the Tax side of it ...... is it best to set up a limited company or use an umbrella company? I know there are advantages and disadvantages to both ...Ideally I'd want the easy option as I'm lazy like that.
Any advise would be greatly appreciated
Cheers

 

[Joey Jo Jo Jr. Shabadoo]

I went with Umbrella company when I was contracting, I used Parasol, just seemed easier and like you I am lazy. Just sent them my time sheets, they sorted out all the invoicing and paid me at the end of the month, making sure all tax and NI etc was costed. They also knew what allowances I could claim for too and I could do most of it online. They were also pretty good at sorting out any issues that arose.

 

[LlcoolJ]

Amazed umbrella companies still exist. Get a decent accountant and go Ltd.

If they are good then you won't have to do anything apart from supply them information and they'll run everything for you. And by "decent" I mean one who isn't going to charge you £1500 a year and will actually handle everything.

Word of mouth being the best way to find one.

 

[Soulman]

I hate Umbrella companies, luckily not had to use this leeching type of payment. Some of the agencies (and i have managed to stay clear of the blood sucking parasites) are ditching the Umbrella scam and just doing straight CIS, so no need to go Ltd.
Take a look at this video re Umbrella Scam., my industry and one of the lads is a good colleague of mine.

 

[Bevendean Hillbilly]

I use an umbrella company to administer my ltd company when I'm contracting. It works well until, like me, you break your leg and find yourself totally unable to earn.

Note to self. Get insurance.

 

[LlcoolJ]

I use an umbrella company to administer my ltd company when I'm contracting. It works well until, like me, you break your leg and find yourself totally unable to earn.

Note to self. Get insurance.

Why use an umbrella company if you have your own Ltd company? It makes no sense.

 

[Soulman]

Why use an umbrella company if you have your own Ltd company? It makes no sense.

Exactly.

 

[FamilyGuy]

Amazed umbrella companies still exist. Get a decent accountant and go Ltd.

If they are good then you won't have to do anything apart from supply them information and they'll run everything for you. And by "decent" I mean one who isn't going to charge you £1500 a year and will actually handle everything.

Word of mouth being the best way to find one.

I'm limited.

and I pay my accountant about £250 pa to sort things out for me.

 

[Randsta]

I'm limited.

and I pay my accountant about £250 pa to sort things out for me.

Hi

Can you recommend the guy that you use? can you PM his details? Cheers

 

[NooBHA]

Hi Guys and Gals

I'm thinking of doing some contracting work and was wondering if any of you people experience of the Tax side of it ...... is it best to set up a limited company or use an umbrella company? I know there are advantages and disadvantages to both ...Ideally I'd want the easy option as I'm lazy like that.
Any advise would be greatly appreciated
Cheers

Most definately set up your own company. Also dependent on who you are contracting to. Consider Registering on Flat Rate VAT Scheme immediately as this could be extremely ''tax efficient'' for you to do.

The structure of shares in the company could also be tax efficient with decent tax planning beforehand

 

[dadams2k11]

I have done both and Umbrella is the best if you're contracting, You don't really have anything to offset the tax with if your contracting with a Ltd Company and you have to pay Corp tax. Im under Umbrella now and earning more though it.

Edit - Using Pay-sure for Umbrella

 

[NooBHA]

I'm limited.

and I pay my accountant about £250 pa to sort things out for me.

An accountant who does everything for a Ltd Co for £250. He must be one in a million.

To get most get the most out of a Ltd Company you need to

1. Potentially be VAT Registered
2.Run a payroll scheme
3.Structure the shares in the company and plan accourdingly
4. Prepare company accounts and lodge with HMRC
5. Prepare annual Returns and lodge with HMRC
6. Tax planning on Distribution of income and dividends
7. Prepare personal tax return(s)

On top of all of that there is the ongoing correspondence between Accountant/Client/HMRC. Any Accountant who can do all of that for £250 Thats approximately £205 plus VAT - I would suggest you have and have been getting a bargain. Either that or he is overlooking some of the above

 

[NooBHA]

I have done both and Umbrella is the best if you're contracting, You don't really have anything to offset the tax with if your contracting with a Ltd Company and you have to pay Corp tax. Im under Umbrella now and earning more though it.

Edit - Using Pay-sure for Umbrella

HMRC Target Umbrella Companies but they cant keep up with them. You probably find that no Umbrella companues last for more than 24 months before closing down and replaced by another. Also their fees are very high and you have no redress with them simply because they are closed within 24 months

 

[Gazwag]

I have done both and Umbrella is the best if you're contracting, You don't really have anything to offset the tax with if your contracting with a Ltd Company and you have to pay Corp tax. Im under Umbrella now and earning more though it.

Edit - Using Pay-sure for Umbrella

Not sure I follow you, as a limited company any tax deducted from your income is set against your CT liability. I'd be interested so see if you know how much you are suffering in charges under an umbrella, I'd wager much more than an accountant would cost you.

 

[Tom Hark Preston Park]

An accountant who does everything for a Ltd Co for £250. He must be one in a million.

To get most get the most out of a Ltd Company you need to

1. Potentially be VAT Registered
2.Run a payroll scheme
3.Structure the shares in the company and plan accourdingly
4. Prepare company accounts and lodge with HMRC
5. Prepare annual Returns and lodge with HMRC
6. Tax planning on Distribution of income and dividends
7. Prepare personal tax return(s)

On top of all of that there is the ongoing correspondence between Accountant/Client/HMRC. Any Accountant who can do all of that for £250 Thats approximately £205 plus VAT - I would suggest you have and have been getting a bargain. Either that or he is overlooking some of the above

The top of the range local accountancy firm I used when contracting through my own limited company charged £100 a month. For that they did the lot, all I had to do was sign a few papers now and again. Worth every penny, they saved me far more money than they cost me.

 

[dadams2k11]

HMRC Target Umbrella Companies but they cant keep up with them. You probably find that no Umbrella companues last for more than 24 months before closing down and replaced by another. Also their fees are very high and you have no redress with them simply because they are closed within 24 months

I pay £24 p/w £1248 p/a. Are you an accountant by any chance?

Not sure I follow you, as a limited company any tax deducted from your income is set against your CT liability. I'd be interested so see if you know how much you are suffering in charges under an umbrella, I'd wager much more than an accountant would cost you.

CT is 20 % of your yearly profit, as a contractor i had no real outgoings only salary/dividends so my profit was of course high hence the high CT. Now i don't claim to know a lot about it all worked, that was what my accountant (Tax Assist) told me. I got lost in it all and found it complicated so went down the Umbrella path.

 

[Tight shorts]

IR35 - google it. if caught within this, you will have limited expenses to claim so Umbrella Co may be a simpler option. If not, working through your own LTD Co should enable you to claim various expenses which can be set against corporation tax. So, the route to take will depend in part on whether you are genuinely freelance and don't fall foul of IR35 rules. Bear in mind also that the tax on dividends will increase from April 2016 onwards which affects many people working through their own LTD Cos.

 

[Wondergull]

I have used www.crunch.co.uk who are based in Hove for the last four years and have found them very good. Everything is done online but you have a dedicated account manager to speak to and accountants available if necessary. Have a look at their website as they have a free demo to play around with.

BTW, I am accountant but use these guys as I didnt want to screw things up!

 

[Badger]

I have used www.crunch.co.uk who are based in Hove for the last four years and have found them very good. Everything is done online but you have a dedicated account manager to speak to and accountants available if necessary. Have a look at their website as they have a free demo to play around with.

BTW, I am accountant but use these guys as I didnt want to screw things up!

I have been using them too and completely agree, they provide a great service and the website is superb. It was definitely more tax efficient to go the Ltd. route rather than the Umbrella route, especially as I was claiming for my commuting costs.

 

[NooBHA]

The top of the range local accountancy firm I used when contracting through my own limited company charged £100 a month. For that they did the lot, all I had to do was sign a few papers now and again. Worth every penny, they saved me far more money than they cost me.

YEP £1200 plus VAT in Brighton is about right in London a decent firm charges £1600 -£1800 plus VAT for that sort of service. That's what I would expect but the post which said £250 for the lot was what I sort of doubted and if correct was a massive bargain