Contractors inside IR35, or contractors who are not sure how long they plan to spend contracting, might find that a PAYE umbrella company solution is the best trading option for them, rather than a limited company. Although not as tax efficient as a contractor limited company, the best umbrella company solution providers can offer a fast contracting solution for those not sure if contracting is their long-term career choice.
But what exactly are you buying when you sign up to umbrella companies and how do you know which is the best one for you? Here are ten tips for choosing the best for your needs:
1. Check that an umbrella company is the right trading solution for you
Limited company or umbrella – which payment structure to use? Make sure that when you are choosing between these options you choose a trading solution that best fits your needs. Explain your situation to both an umbrella company and a contractor accountant for advice on which option suits you best.
2. Dig deep into the umbrella company’s background
If an umbrella option is the right trading solution for you, make sure you check up on the firm’s background, including its credit rating and how long it has been trading. Ask if it would move your money offshore at any stage; if so, it might not be a true PAYE umbrella company and could actually be providing an offshore tax solution.
3. Make sure you get the complete picture on fees
Not all umbrella companies are transparent about their fee structures, so find out exactly how much you will be paying each week or month. Before joining a contractor umbrella scheme check if the fees are fully inclusive or if you have to pay for extras, such as expenses processing, completing tax forms and processing expenses. If it’s a free service, ask the umbrella how and why it can do this.
4. Ensure you receive a full contract of employment
As an umbrella contractor, you will become an employee of the umbrella firm. You should receive a full contract of employment from the company and enjoy all the statutory rights and benefits that UK employees are entitled to. Check before you sign up that a full contract of employment is offered.
5. Find out the process for claiming expenses
Umbrella companies making exaggerated claims about how much tax you could save by claiming contracting expenses without receipts warrant deeper investigation. If a company runs non-compliant expenses, what else may be non-compliant? A dispensation from HMRC might be claimed by the umbrella company, but this is fairly meaningless as all it means is the firm does not have to complete a P11D form for every contractor.
But what exactly are you buying when you sign up to umbrella companies and how do you know which is the best one for you? Here are ten tips for choosing the best for your needs:
1. Check that an umbrella company is the right trading solution for you
Limited company or umbrella – which payment structure to use? Make sure that when you are choosing between these options you choose a trading solution that best fits your needs. Explain your situation to both an umbrella company and a contractor accountant for advice on which option suits you best.
2. Dig deep into the umbrella company’s background
If an umbrella option is the right trading solution for you, make sure you check up on the firm’s background, including its credit rating and how long it has been trading. Ask if it would move your money offshore at any stage; if so, it might not be a true PAYE umbrella company and could actually be providing an offshore tax solution.
3. Make sure you get the complete picture on fees
Not all umbrella companies are transparent about their fee structures, so find out exactly how much you will be paying each week or month. Before joining a contractor umbrella scheme check if the fees are fully inclusive or if you have to pay for extras, such as expenses processing, completing tax forms and processing expenses. If it’s a free service, ask the umbrella how and why it can do this.
4. Ensure you receive a full contract of employment
As an umbrella contractor, you will become an employee of the umbrella firm. You should receive a full contract of employment from the company and enjoy all the statutory rights and benefits that UK employees are entitled to. Check before you sign up that a full contract of employment is offered.
5. Find out the process for claiming expenses
Umbrella companies making exaggerated claims about how much tax you could save by claiming contracting expenses without receipts warrant deeper investigation. If a company runs non-compliant expenses, what else may be non-compliant? A dispensation from HMRC might be claimed by the umbrella company, but this is fairly meaningless as all it means is the firm does not have to complete a P11D form for every contractor.
Read Full Article Here: Best Umbrella Company – 10 Tips for Contractors to Choose
No comments:
Post a Comment