LTD and benefits?

[LisaContractorUmbrella]

Not always the same, I am not aware of a brolly that will pay for a contractor's mobile phone bill as an example.



The 1% discount in the first year is temporary, but the regular scheme certainly is not, it is an ongoing saving for contractors.



No it doesn't - it can be paid as a dividend, it is likely to be very small but it does not have to be retained in the company.



I understand that, but why do some brollies charge more to process a payment if it is monthly rather than weekly. If a brolly can process a payment for say £25, why charge £100 if it is done monthly? The work is exactly the same?



Good, although why charge £27.50 to process a weekly payment and £95 to process one monthly? I cannot see that your costs are any greater because the payment is done once a month rather than once a week?

I agree that in some limited cases, an umbrella can be a viable option, but in most cases, trading through a limited company is more efficient.

Totally agree that a Ltd Co is more cost effective for many people but cost is not the only consideration when making a decision about whether to go Ltd or brolly.

[Andrew@Wisteria]

Rather than trawling through multiple opinions on this forum, suggest phoning a recommended accountant.

Generally we do not recommend umbrella companies, reasons which have already been spelt out by others.

Ideally you want an accountant / business advisor that is experienced, knowledgable & that you can build a good rapport with.

[socialworker]

I found umbrella very useful in that I was suddenly offered work and did not have time to consider all the pros and cons so umbrella was a safe option. For someone who has been paye all my working life, I was pretty nervous of going limited as I am one of those people who always think they will be caught if they do anything wrong. Years ago when bringing up my daughter at home I tried to do some music teaching at home, and dutifully told the taxman, at the end of the year they sent me an estimated tax bill which was wildly in excess of what I had actually earned. That really put the wind up me although it worked out ok eventually.

if someone is just starting out, taking on a contract role might be challenging enough without the worry of being responsible for a ltd co. I don't agree that umbrella companies are a rip off, ok there are more tax efficient ways of working but for the ease and peace of mind they aren't a bad deal if you have plenty of mileage/accommodation costs.

I did have time to work out that going with an umbrella co was only an advantage over working paye for an agency if I had lots of mileage, which I do for this (my first) gig under brolly. I reckoned I would be caught by IR35. However, if I get my next gig nearer home it will not be worthwhile but for safety I reckon I need to stay with the brolly for another gig to prove I had the intention of working at more than one place of work, as I have no wish to pay back all the tax I have avoided through claiming mileage to and from work.

[Wanderer]

if someone is just starting out, taking on a contract role might be challenging enough without the worry of being responsible for a ltd co.

Agree with that.

I know a lot of the more experienced people can be negative about umbrella companies but they definitely have their place as they offer a simple payroll solution which means that noobies don't have to bother with forming a company, VAT, bank accounts, HMRC, IR35, book keeping or sorting out accountancy cockups.

Umbrella expenses policies are pretty well defined and generally conservative enough to keep you well within the rules for allowable expenses so you won't get yourself into trouble there either.

Yes, you will pay more tax but if you are IR35 caught or you just want a quiet life (don't we all!) then they may be an option.