£450/day IT contract for 3 months. Umbrella or limited company?

[Alan @ BroomeAffinity]

£450/day IT contract for 3 months. Umbrella or limited company?

I was on a contract making exactly the same as you, £450/day. I used an umbrella company and the take home was circa 7k a month. Tried to compare limited company but definitely the take-home is nowhere near.

You're not via brolly, you're through an offshore scheme. Those take homes are not possible on a standard brolly.

You mentioned IQ on another thread as if you use them. This bears out the above.

If you don't know you're in a scheme, and you don't know the difference between the two, you're in for a whole heap of trouble down the line.

And also, these people are ripping you off. Every penny deducted goes into their pocket. No (or very very little) tax is paid. Why do you think they can afford to pay £750 referrals. That's more than a brolly make in profit per contractor per year.

[IR35 Avoider]

The last time I chose between the two, when on a significantly less than £450, and treating myself as IR35-caught, I found the break-even (for inside IR35) was something lie 20 days work within the tax year. Above that a LTD was more cost-effective.

Remember if IR35-caught, and you only work part of the year, your National Insurance will probably be higher via a brolly. If you work less than a full year, the annual pay period that company directors have saves you money, by comparison. When you go via a brolly you will have a weekly or monthly period, which works out more expensive if you don't earn the same amount in all weeks/months of the year.

Apart from possibly less National Insurance via a LTD, you can also make a profit from flat-rate VAT that is more than big enough to pay all your accountancy fees.

Lastly, my on-line accountant charged less to run a company for a year than Parasol would have charged to be my umbrella.

It's a bit of a no-brainer, really.

[psychocandy]

I thought the difference was only like %5? Sweet deal though either way to me.

£22.50 a day. £125 a week. £500 a month.

Admitedly, if you're not going to stick with contracting then its pointless going limited but thats a lot of money to save minimal hassle with going limited in my book....

[psychocandy]

Someday. I think if I start getting more limited-term project work that feels like consultancy I'll go the limited company route. At least I don't feel like I need to run screaming from the umbrellas now!

Assuming you plan to stick with contracting, I would be if I were you. Its costing you a fortune!

[dogzilla]

I wish i went brolly first gig or two, would have saved me making a mess of my LTD accounts that took ages to recover from!

That's your own stupid fault, sorry to say. It's so simple to run a LTD< i wonder how you got into so much bother.

All you have to do is call up one of the reputable accountants, intouch, SJD, whatever. Those guys will make sure you don't make a mess of your accounts.

[Mincepie]

That's your own stupid fault, sorry to say. It's so simple to run a LTD< i wonder how you got into so much bother.

All you have to do is call up one of the reputable accountants, intouch, SJD, whatever. Those guys will make sure you don't make a mess of your accounts.

I was green and was with Churchill Knight.......The rest is history

I was an idiot but all sorted now and with left CK in the dust and tears (my own)

[northernladuk]

That's your own stupid fault, sorry to say. It's so simple to run a LTD< i wonder how you got into so much bother.

All you have to do is call up one of the reputable accountants, intouch, SJD, whatever. Those guys will make sure you don't make a mess of your accounts.

If we are talking normal brollies here then this is rubbish. Not everyone can do it for one reason or another and has been proven time and time again on here. There is absolutely nothing wrong with going brolly for a short period of time. It's not as efficient (and maybe even less so now with the T&S changes granted) but just for a short stint in a long contracting career it's absolutely peanuts.

It's a tool, it's not for everyone but using one to start off with is not stupid.

[Mincepie]

If we are talking normal brollies here then this is rubbish. Not everyone can do it for one reason or another and has been proven time and time again on here. There is absolutely nothing wrong with going brolly for a short period of time. It's not as efficient (and maybe even less so now with the T&S changes granted) but just for a short stint in a long contracting career it's absolutely peanuts.

It's a tool, it's not for everyone but using one to start off with is not stupid.

I dont think he was having a go at people with brollys but me getting into a pickle 3 years ago when i should have gone brolly in the first contract instead of going all rock star with my cash while (not) running a LTD. I said before i wish i had found this forum then...

However what a year that was

[northernladuk]

I dont think he was having a go at people with brollys but me getting into a pickle 3 years ago when i should have gone brolly in the first contract instead of going all rock star with my cash while (not) running a LTD. I said before i wish i had found this forum then...

However what a year that was

Ahh fair enough. Thanks for the clarification.

[Mincepie]

Ahh fair enough. Thanks for the clarification.

I dont how i will sleep tonight now though as someone has been nasty to me on the interspaz