Accountant advised me to go Umbrella ?!?!

[Wanderer]

Even so, if you can demonstrate wholly etc then the expense can still be claimed (same as any other) through your tax return.

Quite right. The umbrella may also allow the expense - it's worth checking with a few of them to see what their policy is.

[LisaContractorUmbrella]

Quite right. The umbrella may also allow the expense - it's worth checking with a few of them to see what their policy is.

Without wishing to be pedantic - an umbrella company's policy can only reflect what is allowed by HMR&C

[ASB]

Despite what the big boys here say, Umbrellas aren't all evil and your manhood won't shrivel up and drop off if you use one - lots of contractors use them because they are an easy solution and you won't lose any sleep worrying about being visited by the tax man. If you are at all worried about the admin and tax position of running a LTD company then just go with the umbrella. Choose the quiet life, get on with your career and take the money at the end of the day.

Once you see your P60 from the umbrella and find out how much tax you paid, you may want to reconsider the LTD company route or if you may be happy to stick with the convenience of the umbrella. It's up to you.

+1

They aren't the spawn of satan. Suit a lot of people, for a lot of different reasons.

[LisaContractorUmbrella]

+1

They aren't the spawn of satan. Suit a lot of people, for a lot of different reasons.

+2 definitely not the spawn of Satan (sure I would have noticed )

[Wanderer]

Without wishing to be pedantic - an umbrella company's policy can only reflect what is allowed by HMR&C

Yes, absolutely but let's take the case where the expense would be allowable if the worker was trading as a LTD company so it's logical that the same expense should be allowable through an umbrella.

Not sure if all umbrellas do it but I've seen some that allow capital expenditure on expenses, the asset then becomes the property of the umbrella. They then permanently loan the asset back to the worker on a 3 year loan. The worker pays the umbrella a nominal amount of the value up front (say 5%) as an advance payment to buy the asset after 3 years when it's fully depreciated to zero value on their books. The net result is that the worker gets the tax back less 5% which goes in the umbrella's pocket. I don't know if that's the normal procedure or if it's a bit of an underhand way of doing things.

What do you think, Lisa?

[LisaContractorUmbrella]

Yes, absolutely but let's take the case where the expense would be allowable if the worker was trading as a LTD company so it's logical that the same expense should be allowable through an umbrella.

Not sure if all umbrellas do it but I've seen some that allow capital expenditure on expenses, the asset then becomes the property of the umbrella. They then permanently loan the asset back to the worker on a 3 year loan. The worker pays the umbrella a nominal amount of the value up front (say 5%) as an advance payment to buy the asset after 3 years when it's fully depreciated to zero value on their books. The net result is that the worker gets the tax back less 5% which goes in the umbrella's pocket. I don't know if that's the normal procedure or if it's a bit of an underhand way of doing things.

What do you think, Lisa?

I can't see how this would work in practise tbh - surely the contractor has to pay the umbrella company the full value of the asset at the point of purchase to avoid the umbrella company losing money?

[Wanderer]

I can't see how this would work in practise tbh - surely the contractor has to pay the umbrella company the full value of the asset at the point of purchase to avoid the umbrella company losing money?

Parasol is the one I was thinking of:

Sundry office expenses

Claiming the full cost of any purchase requires a security deposit* equivalent to 10% of the purchase price to be paid. The equipment will become the property of Parasol, with the option to purchase it after a qualifying period at a second-hand value assumed to be equal to 10% of the purchase price.* The 10% deposit will deducted from your net pay following your authorisation.

In reality, I don't think the umbrella ever takes possession of the assets. The value of the asset would be accounted for by the umbrella and depreciated over X years until it's written off...

[LisaContractorUmbrella]

Parasol is the one I was thinking of:

Sundry office expenses

Claiming the full cost of any purchase requires a security deposit* equivalent to 10% of the purchase price to be paid. The equipment will become the property of Parasol, with the option to purchase it after a qualifying period at a second-hand value assumed to be equal to 10% of the purchase price.* The 10% deposit will deducted from your net pay following your authorisation.

In reality, I don't think the umbrella ever takes possession of the assets. The value of the asset would be accounted for by the umbrella and depreciated over X years until it's written off...

I could be being a bit thick here but does that read to you that the contractor buys the equipment but, in order to claim the full cost as an expense, has to pay their umbrella company 10% of its value - surely not