Ltd Co, umbrella, PAYE, Sole trader.... Whats the correct course?

[Martin at NixonWilliams]

Just to clarify - you will only be significantly financially better off through a Ltd Co if you are outside IR35

Even in the unlikely event the OP is caught by IR35, an (IR35 caught) IT contractor earning £2,000 a week could earn close to £4,000 in additional turnover for being on the flat rate scheme in their first year.

They could also take roughly £5,000 as a dividend paying an effective rate of tax or 22.5% that would otherwise be subject to income tax at 40%, employees NI at 2% and employers NI 13.8% if paid through an Umbrella.

There is also the risk of the contractors income being handled by a third party of course, which we all know has left contractors out of pocket in the past.

We don't know the OP's circumstances of course but the above are significant enough for me.

[Martin at NixonWilliams]

Broadly speaking, yes, but it depends on the contracts being outside IR35 and on a "reasonable" turnover. IMHO it doesn't make much sense to run a company w/ a turnover less than 30-40k

Why would you consider this in the OP's circumstances? The contract is one on a 6 months rolling basis. Aside from the occasional 2/3 month contract I am yet to see a contractor with turnover that low.

[Worcsman]

Why would you consider this in the OP's circumstances? The contract is one on a 6 months rolling basis. Aside from the occasional 2/3 month contract I am yet to see a contractor with turnover that low.

The turnover is about right for the 6 month contract

[jamesbrown]

Why would you consider this in the OP's circumstances? The contract is one on a 6 months rolling basis. Aside from the occasional 2/3 month contract I am yet to see a contractor with turnover that low.

Perhaps because the OP didn't state their circumstances and explicitly mentioned the "easiest, stress free route."

[Martin at NixonWilliams]

The turnover is about right for the 6 month contract

In that case you should consider the likelihood of the contract being extended and decide from there.

Incidentally, I would set the general benchmark for going with a limited company to lower than £30k-£40k, but it depends on your circumstances.

[Worcsman]

Perhaps because the OP didn't state their circumstances and explicitly mentioned the "easiest, stress free route."

I did say that. Am now looking at other things as well as easy and stress free. Specifically Ltd co with trust fund. Anyone have experience of these?

[Worcsman]

In that case you should consider the likelihood of the contract being extended and decide from there.

Incidentally, I would set the general benchmark for going with a limited company to lower than £30k-£40k, but it depends on your circumstances.

Thanks. The contract will be extended. It has in the past, it will be my fourth stint there in 8 years.

[jmo21]

I did say that. Am now looking at other thing as well as easy and tress free. Specifically Ltd co with trust fund. Anyone have experience of these?

Ah, makes sense now, you've heard* you can get 95% of your billable or whatever.

Just the title of this forum should be enough to steer you off that path.

*where "heard" = a salesman told you.

[jamesbrown]

There is also the risk of the contractors income being handled by a third party of course, which we all know has left contractors out of pocket in the past.

As have dodgy accountants. Having another link in the chain creates an additional risk, but it's manageable if you opt for a reputable umbrella, and the greatest risk remains from clients failing to pay. The OP clearly stated their desire for the "easiest, stress free route." There are plenty of people, even those with accountants, that start companies and really don't have a clue about what they're doing because they don't have the time or inclination to understand the rules. A Ltd is appropriate for many people, but I wouldn't necessarily describe it as the easiest, most stress free route if you're doing it properly.

[Worcsman]

Ah, makes sense now, you've heard* you can get 95% of your billable or whatever.

Just the title of this forum should be enough to steer you off that path.

*where "heard" = a salesman told you.

Hey well thats why Im asking, the umbrella Ive used for years used to push EBTs, I never got involved, sounded bad from the off. But Ive just received an illustration of the Ltd co with trust and 80% retention including accountants fees, invoicing etc. Yes sounds suss! Googled and cant find much on this. I'm told they have been running this for 25 years and never had anyone found to be in breach of HMRC rules. Yes the guy is a salesman, yes I am a cash cow have been for more than 2 decades but never used ltd co plus trust. Is retaining an additional 10% over the 70ish% a normal ltd company would offer worth it? No idea the level of risk. If someone else does, i would be pleased to hear it.