Newbie (Ltd or Umbrella dilema)

[rp83]

All - As title says, I am newbie to contracting and would really appreciate a direction from someone who is guru in this field.

Briefly here is the scenario -

Expected daily salary of £175
Expected monthly travel expense - £300
Contract length - 9 months

Of course, duty of confidentiality prevents me to go any more deeper but I hope someone can please shed some light here. I have ran several comparisons on some websites but answers aren't transparent as I would expect.

Over to you Gurus :-)

[LisaContractorUmbrella]

I am not really sure what you're asking but I am assuming that you are interested in which vehicle will give you the best return? The answer is - it depends. If you are outside IR35 IR35 Legislation - Advice, Help and Information for UK Contractors then you would be financially better off running your own Ltd Co; if you were inside IR35 there would be little difference in take home between Ltd or umbrella. With a Ltd Co you take on the responsibilities of running a business and you will need to be disciplined with your finances so that you can meet your tax liabilities; with an umbrella you are an employee and your taxes are taken care of through PAYE. If you have a Ltd you can decide which accountant you want to use - if you take the umbrella route you may find that your choice is dictated by the recruiter. There are pros and cons with both options but for a first time contractor in your sort of situation a brolly is probably the best option for the first few months at least.

Just going back to the money side of things - whichever route you decide to take beware of providers offering you high take home pay (80%+) - they are typically tax avoidance schemes that will probably land you in trouble with those lovely people at HMRC. If you take the umbrella route - your promised take home pay should be the same whichever company you use - the only difference will be their margin (and the level of service that you get)

[northernladuk]

Go Umbrella. BTW I do know one that can help you at a very good price.

FTFY

[LisaContractorUmbrella]

FTFY

[northernladuk]

Have a look at this site for some proper information on Brollies..

All Umbrella Companies Are Equal - Straight Talking Umbrella Companies

Brollies are a good idea if you are just finding your feet and have other things to concentrate on rather than wading through the mire of starting a LTD. You could go brolly for a couple of months and then when you are comfortable switch to LTD. Not quite the most efficient way but better than messing up your accounts from day one. A few months of a long contracting career isn't a big deal. I did and I know a couple of others here did.

Just check the expenses thing through. I am confused about the situation at the moment but there could be a problem claiming expenses if you only do a single assignment through a brolly.

Take the time to read up on IR35, 2 year rule and a host of other legislation that affects you in the mean time. Plenty of links to the right to read first -->

[LisaContractorUmbrella]

NLUK is right - if it is your intention to only have a single assignment through an umbrella company it will be viewed by HMRC as a permanent workplace and therefore no tax relief on travel and subsistence is allowed

[NotAllThere]

On that level of income, I'd recommend a brolly.

[rp83]

Thank you all, much appreciated. I have spoken with couple of accountancy firms and there has been clear take away from those calls, LTD is a better option. Next move is to speak to Brollies and I am sure the outcome will be otherwise this time around :-)

Am I okay to ask/list the company names on the forum? (I've met my quota for stupid Qs)