I have read all sorts of info / forums on the pros and cons of Umbrella companies vs Limited Companies.
I thought I would be "clever" and create a limited company. I've haven't traded yet. Now I'm it looks likely that I will have between 2 to 3 months work at £150 gross a day.
I thought now was the time to actually use my limited company, now I am not so sure as my take home pay from Parasol would actually be higher!
Using my Limited Company my tax accountant advised to keep 18% of what I earn available for tax etc.
Using Limited company £150 x 5 = 750 x 4 = £3000 - £540 = £2460 net
Using Parasol take home online calc = £2740 net
The Umbrella company actually looks a lot better, going against what I've read.
Also I'm not convinced / don't know if I will actually get many contracts until I have some new qualifications /experience or I could just go for permanent again , so I could be spreading my tax accountant fees of £450 across say 3 months pay... that's another £150 off the Limited company net amounts.
Can any one explain why the umbrella company looks so much better? Some people say that a Ltd company is has no advantage unless you earn £30k , others say £50k.
Even if I had 3 months pay totaling £9k, was taxed etc on £8k as a salary , took £1k dividend and took off the accountancy fee , the Ltd amount isn't very impressive.
Additionally , this role could be IR35 - I will be told to be a certain place to do specific IT tasks during specific hours - I'm guessing I would end up paying PAYE anyway?
Any advise is welcome, I'll need to make a choice soon between using my limited company and paying account fees or just keeping it dormant for £50 fee and not trading.
Thanks in advance.