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vinnyl
Joined: 30 Oct 2009
Posts: 10
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 Posted: Fri Oct 30, 2009 4:44 pm Post subject: Umbrella Company |
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| Why would you use an umbrella company or what are the benifits of using one |
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montyzuma
Community Moderator
Joined: 25 Jul 2007
Posts: 7536
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Cameron Wallace
Joined: 19 Feb 2009
Posts: 19
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| Posted: Tue Nov 10, 2009 11:02 am Post subject: |
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So many Umbrella Companies. Also look at running your own Limited Company or Financial Management Structures. Best one depends on your situation; how long your contract is for, rate of pay etc.
Google 'Umbrella Companies', all the services they offer are very similar. |
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itpaul
Joined: 19 Mar 2009
Posts: 8
Location: leigh
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| Posted: Tue Nov 17, 2009 10:33 am Post subject: using a umbrella company |
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The main reason for using them is to remove any ir35 risk you may have.
The other plus that I have found is the higher returns I get hassle free.
A good guide on IR35 can be found from these guy`s
http://www.antonyjholdsworth.co.uk/
Hopr this is of some help. : |
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montyzuma
Community Moderator
Joined: 25 Jul 2007
Posts: 7536
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| Posted: Tue Nov 17, 2009 10:37 am Post subject: |
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I was under the impression that using an umbrella company was more likely to put you under ir 35 regs which is why so many of them got out of it or shut down.
Since the April 2007 Budget and the introduction of the Managed Service Company Legislation, there is only one umbrella option available, namely the PAYE umbrella.
...your IR35 status is not dependant on your payment structure.
If you use a PAYE umbrella scheme, all your revenue is taxed as though you are an employee, the same as if you were inside IR35. You could in theory use a PAYE umbrella if you were outside IR35, but for higher earners this would be losing out on significant tax advantages. For those contractors outside IR35 a limited company is now the most tax efficient route. |
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itpaul
Joined: 19 Mar 2009
Posts: 8
Location: leigh
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| Posted: Tue Nov 17, 2009 11:20 am Post subject: |
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| montyzuma wrote: | I was under the impression that using an umbrella company was more likely to put you under ir 35 regs which is why so many of them got out of it or shut down.
Since the April 2007 Budget and the introduction of the Managed Service Company Legislation, there is only one umbrella option available, namely the PAYE umbrella.
...your IR35 status is not dependant on your payment structure.
If you use a PAYE umbrella scheme, all your revenue is taxed as though you are an employee, the same as if you were inside IR35. You could in theory use a PAYE umbrella if you were outside IR35, but for higher earners this would be losing out on significant tax advantages. For those contractors outside IR35 a limited company is now the most tax efficient route. |
That`s not correct, there are ways and means (all legal) that high earners can get returns that outstrip any that they would get from using a limited company.
I have been using one for some time now and my returns are far better then when I was using a limited company.
I didn`t have to pay a joining fee, I don`t pay monthly subs and there is no exit fees.
With the bonus that I am outside IR35 and do not have to rely on excessive expenses (which the revenue are now looking more closely at) to up my returns.
In essence I am getting a higher return with less hassle then if I had stayed with my limited company. |
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montyzuma
Community Moderator
Joined: 25 Jul 2007
Posts: 7536
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| Posted: Tue Nov 17, 2009 11:22 am Post subject: |
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that quote is from the ir35 government site
joining fee monthly subs exit fee?????
what do you mean |
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Cameron Wallace
Joined: 19 Feb 2009
Posts: 19
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| Posted: Thu Nov 19, 2009 3:56 pm Post subject: |
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Umbrella's can only process your payments PAYE, deducting your expenses to offset tax, they will not be caught by IR35. LTD companies are the ones the IR35 legislation is targeting.
I believe the structures that he is referring to with high returns are called Financial Management Structures where a small component of your gross billing is paid to you PAYE and the remainder through an EBT structure in the form of a loan. Highly tax efficient, jury is out as to when/how Gordon and his chums will try to crack down on it, so far they haven't had much luck. |
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montyzuma
Community Moderator
Joined: 25 Jul 2007
Posts: 7536
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| Posted: Thu Nov 19, 2009 4:05 pm Post subject: |
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as far as im aware
umbrella companies were caught under the last changes which is why they only do the paye option now.
most guys i know who were under umbrella companys (myself included) moved to a ltd company and watched what contract they signed
so far so good |
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