When you work under an umbrella company, it’s not much different to having an employer. The umbrella company basically acts as a middleman between you and whoever is benefitting from your services. Most admin and taxes will be processed on your behalf, but you’ll also pay more than if you were going it alone. In essence, you’re not actuallyworking as a contractor, freelancer or consultant.

 

What are the pros?

  • The majority of paperwork is completed on your behalf. Tax is also automatically deducted.
  • Ideal if you are contracting for short periods of time or make less than £25k per annum.

 

What are the cons?

  • Obligation to pay fees, full PAYE Tax and NI insurance (13.8%). Ultimately this way, you do not retain as much of your profits.
  • The Agency Workers Regulations (AWR) of October 2011 means that contractors working more than 12 weeks will now lose even more in profits.
  • Dependence on the umbrella company to deal with your wages.
  • Risk that the umbrella company may go into administration.

 

Is the umbrella approach right for you?

  • Probably: If you earn less than £25k per annum, only want occasional work, and have no plans to build up your own business.
  • Probably not: If you earn more than £25k, want to contract full-time, and plan to build up your own business.

 

Still unsure whether an umbrella company is right for you? Accounts Direct are specialist accountants for contractors, freelancers and consultants. For more information and advice, Speak to us today. Call: 0333 5775 332 or Email: info@account-direct.com

 

Next Step:

Please contact us if you need further advice, have any questions about our services, would like a free consultation.

Speak to us today. Call: 0333 5775 332 or Email: info@account-direct.com

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