A “hassle free” way of contracting, you can be up and running in a matter of hours with an umbrella provider. Umbrella companies are a good solution if you are working on a short-term contract, or receive a modest hourly contract rate. The umbrella company takes care of invoicing, administration, chasing payment, and processing your payroll. You don’t need to concern yourself with admin or paperwork, dealing with HMRC or Companies House. If you are unsure if contracting is the life for you, working via an umbrella company offers a low-risk way of trying things out.
Besides Umbrella Company, most of the contractors set their own limited company. As the term would suggest, the financial liability of limited company directors is limited – their personal finances are separate. Limited company contractors typically take a small salary (minimising PAYE and NIC liabilities), and withdraw the remainder of their income in the form of dividends. NICs are not payable on company dividends. If caught by IR35, the benefits of incorporation are much reduced, but you may still benefit from joining the flat rate VAT scheme, and using the 5% expenses allowance.
Tax Returns & Self Assessment
Many contractors leave the chore of completing their tax return until the very last minute, or even submit their forms late. Failure to do so will result in a minimum £100 fine, with further penalties applicable for both late submission of the form itself, and for any unpaid taxes. You could save yourself a substantial sum if you invest some time in tax planning – ideally via our Services. We will complete the annual return on your behalf at discounted fee; if you have complex personal tax affairs, particularly, this could be a very useful service.
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