Umbrella or ltd company
soulrider · 18/07/2018 11:29
Going back to contract work after a short break. Previously i was an IT contractor in the public sector and was paid via an umbrella company which suited at the time but various rule changes mean I'm revisiting the best approach.
All the advice online suggests that for my earnings I'd be better off via a ltd company but i'm unclear as to how much extra work/hassle it would be to do. Plenty of companies on line that will handhold but I feel a bit uneasy about not really understanding it.
Also, are there any changes in the pipeline that will change things for umbrella companies or ltd companies?
pacer142 · 18/07/2018 11:57
Ltd company is easy if you get a decent accountant. You need a "full package" where they do the formation, explain the set up, register for taxes, do your payroll/vat, etc, and give ongoing advice. It's bread & butter work for accountants. Worst thing to do is to try to do it yourself and then get an accountant at the year end - that's a recipe for disaster as you'll undoubtedly have made mistakes etc along the way. Accountants are used to "hand holding" contractors. Just make sure you go for one recommended by a colleague or if not, then choose a qualified firm (literally anyone can call themselves an accountant so you need to see "chartered accountant" or "chartered tax advisor" on their website or letterhead - otherwise you could end up with someone who has never passed exams and may not have insurance etc.)
Chickenbhunaandoice · 19/07/2018 22:54
You need to look at public sector IR35 in depth.
soulrider · 20/07/2018 11:27
Not working for a public sector organisation this time round. Part of the reason I stuck with the umbrella company previously was because i was working for the civil service and it kept things simple from an IR35 perspective.
TaxDebtsHelp · 23/07/2018 15:53
HI, From my perspective a LTD comp may be best, we deal with a lot of contractors, via Umbrella organisations who are still suffering & will continue to do so around HMRC changes/IR35 leglisation & retrospective taxes owing set ups like this. The main issue still with Umbrellas is that they want you to work under their LTD banner or set up a LTD company (through them) the fees involved are causing contractors to come to us with HMRC arrears for help as it's all still a 'grey' area with HMRC and hidden costs seem in abundance!
Just a note too: a lot of Umbrella organisations are going under owing HMRC large sums in unpaid PAYE from money they should have been paying out for clients!
As per another comment on this post, a good accountant will ensure your LTD company is structured, from set up through trading - Don't take any short cuts though. Any good accountant should offer a fixed fee package nowadays for LTD company accounts & payroll, if you're turnover is likely to be high its best to get the structure across all heads of tax. Depending on what you envision your turnover may be, you could be happy as a soletrader (i know this depends on work industry/necessity etc for LTD sometimes) but can be cost effective on turnover. I think ultimately it needs to come down to the accountancy advice given & if you feel comfy with an accountant, definitely take a recommendation though if you can.
SeaLionsOnMyShirt · 23/07/2018 16:05
HMRC have recently published their consultation about bringing the off payroll working rules into the private sector from April 2019 (possibly 2020), with responses due in from relevant bodies within the next couple of weeks, so you might like to look into this to see how it would affect you if you think that your client might deem your role to fall within IR35.
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