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    Default Newbie 6months contract Umbrella vs Ltd

    Hi there,

    I'm about to start a contract role shortly. And I was thinking of going the umbrella route for two reasons. Which is because I will only do the contract role for a maximum of 6 months. After that I'm planning to leave the UK for another European country.
    Second which I'm still verifying is that it might be inside IR35. Obviously after learning about IR35 and how it works just a week or so ago I will for sure choose an umbrella company if it's determined to be inside.

    However my question for you guys is, if it's not (inside IR35). Would it be worth setting up a limited company for a 6 months contract role? Also taking into consideration my plans of moving abroad post that (if that somehow affects)?
    The day rate is £400. Hence me thinking it might be worth going for a limited company.

    Thanks for your help!

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    Hello,

    Firstly, is this role for a public or a private sector client?

    If the role is inside IR35 then there would be very little difference, if any between your "take-home" pay under the Umbrella versus a personal service company.

    If the role is outside IR35 then it would be wisest to operate through a limited company and structure your remuneration.

    Operating a limited company will bring additional costs, such as accountancy and potentially fees related to the closure but this would come with the added benefit of professional advice and steering.

    If you are planning on leaving the UK, will this be for good, or short term with a plan to return? The answer to this would impact on whether you were able to claim entrepreneur's relief when closing the company.

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    Quote Originally Posted by Patrick@Intouch View Post

    If the role is outside IR35 then it would be wisest to operate through a limited company and structure your remuneration.

    Operating a limited company will bring additional costs, such as accountancy and potentially fees related to the closure but this would come with the added benefit of professional advice and steering.

    If you are planning on leaving the UK, will this be for good, or short term with a plan to return? The answer to this would impact on whether you were able to claim entrepreneur's relief when closing the company.
    He won't be able to claim T&S with a LTD as it's his one and only client will he? That's going to make a LTD look a little less attractive?

    Not sure the advantages of professional advice and steering for a single 6 month gig is a deal breaker is it?
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    Quote Originally Posted by Patrick@Intouch View Post
    Hello,

    Firstly, is this role for a public or a private sector client?

    If the role is inside IR35 then there would be very little difference, if any between your "take-home" pay under the Umbrella versus a personal service company.

    If the role is outside IR35 then it would be wisest to operate through a limited company and structure your remuneration.

    Operating a limited company will bring additional costs, such as accountancy and potentially fees related to the closure but this would come with the added benefit of professional advice and steering.

    If you are planning on leaving the UK, will this be for good, or short term with a plan to return? The answer to this would impact on whether you were able to claim entrepreneur's relief when closing the company.
    This is with a public sector client, so my thinking is that it will fall inside. However it wasn't a certain according to the client who would look into this today for me.

    Reg leaving the UK it will be for good. Or until my SO has had enough.

    What are the 'normal' costs of closing a limited company?
    And could you expand on what you mean by: "but this would come with the added benefit of professional advice and steering."?

    thank you!

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    Quote Originally Posted by polagon View Post
    This is with a public sector client, so my thinking is that it will fall inside. However it wasn't a certain according to the client who would look into this today for me.

    Reg leaving the UK it will be for good. Or until my SO has had enough.

    What are the 'normal' costs of closing a limited company?
    And could you expand on what you mean by: "but this would come with the added benefit of professional advice and steering."?

    thank you!
    Brolly, next!

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    Folk on usually mention £25k (or is it £30k?) minimum for it being "worth" going ltd as well.

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    Quote Originally Posted by jmo21 View Post
    Folk on usually mention £25k (or is it £30k?) minimum for it being "worth" going ltd as well.
    Indeed but just to note that was for an outside gig where T&S was allowed. Difficult to give a figure now as it will depend on how much travel there is. But if he is inside whichever he uses the numbers should still count.

    Bottom line is we can't advise the OP until we know the exact details of his situation.
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    Quote Originally Posted by jmo21 View Post
    Folk on usually mention £25k (or is it £30k?) minimum for it being "worth" going ltd as well.
    Ok, and?

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    If this is inside IR35 then either brolly or Ltd would provide about the same results as OP would be unable to claim T&S in either case and would pay tax on pretty much everything invoiced.

    If this is outside IR35 then that may swing toward Ltd company and the professional advice and steering would really revolve around making sure that the correct costs are being claimed and that the closure is dealt with properly.

    It's not necessarily the length of the engagement which is important as you would still need to be aware of your responsibilities and that there are specific orders that need to be followed when closing a company.

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    Hi everyone! First thanks for the help so far. I've just been told by the client that this role will actually fall outside IR35 to my surprise. Being public sector and all.

    So that has left me thinking if I shouldn't go down the limited company route. I've started to set up everything with an Umbrella company, but it hasn't been fully finalised yet. And before I do, I wonder what your thoughts on here are:

    Summarise: 6 months contract role, public sector but outside if IR35. Will be earning £400 per day. After my contract has finished I will no longer be doing contract roles and my plans are to move to another EU country for the foreseeable future.

    Thanks for any help and thoughts on this.

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