I might be better off as an Umbrella

[Moff]

After having a chat with Darren at 1st, it seems I may be better off using an Umbrella company and not my own limited company... mainly as I'll get paid weekly which I like

Or am I being a dumbass and not understanding all this ?

I have been using Giant, and have been taking home about 77% of my salary.

Can anyone chuck some light on this for me please ?

Moff

[Pondlife]

After having a chat with Darren at 1st, it seems I may be better off using an Umbrella company and not my own limited company... mainly as I'll get paid weekly which I like

Or am I being a dumbass and not understanding all this ?

I have been using Giant, and have been taking home about 77% of my salary.

Can anyone chuck some light on this for me please ?

Moff

Not wanting to question Darren's judgement but what was the reasoning?

[Moff]

Acouple of reasons really.

1. is having to be paid monthly instead of weekly

2. I can claim my mileage and sustinence through the umbrella

3. I don't have to worry about doing any tax returns etc

I am more than happy to be given reasons why I am wrong. I just cant see any reasons for me personally where I will benefit

Moff

[malvolio]

No, nor can I. But, just out of interest:

1. Why is this a problem? And why can't you do it weekly from your own company? Many people do...

2. You claim mileage and sustenance/subsistence( which, BTW?) through your own company. Many people do... Or do you think it's the umbrella's money paying for it - surely not?

3. I don't do these either. That's what we pay accountants for. At least, many people do...

As to why, you get to use all the same rules as the umbrella does, but accountants are cheaper than umbrellas. So you get to keep even more of your money.

Grow up. If it's all too much trouble, go get a real job.

[TheMonkey]

I get paid weekly by my Limited, but I do have to do a tax return and I do buy my own lunch

I reckon that Umbrellas are not as secure as a Limiteds thanks to the HMRC's predatory tactics against "schemes".

I also do a LOT of non-contract work through my Limited and sell physical goods as well which is an advantage.

[Moff]

Here are the calculations I have been given if I use an Umbrella...

http://www.mofomos.co.uk/bike/umbrella(2).xls

If I take more money by using my own LTD I am more than happy to do so, but this seems good for me...

I have always been advised against using an my own LTD, hence having used an umbrella, hence coming on here and asking questions.

Moff

[DaveB]

Acouple of reasons really.

1. is having to be paid monthly instead of weekly

2. I can claim my mileage and sustinence through the umbrella

3. I don't have to worry about doing any tax returns etc

I am more than happy to be given reasons why I am wrong. I just cant see any reasons for me personally where I will benefit

Moff

You dont say if you count as caught by IR35. If so , and you cant get your contracts changed to fix it, you might as well stick with the brolly.

Otherwise :

1. No reason you can't pay yourself weekly as a Ltd.

Even if your accountant, or whoever, does your payroll on a monthly basis all you do is divide that by 4 and pay yourself every week. As long as you pay the correct PAYE and NI at the end of each month there's no problem. Your accountant should be able to tell you in advance what your salary, PAYE and NI will be each month. Do the same for your dividend and you're sorted.

2. No reason you can't claim milage and subsistance as a Ltd.

Just keep receipts and record milage / journeys as you do already. I'm assuming you do this anyway. Remember, it's you the tax man will chase not Giant.

3. Thats what accountants are for.

Any half decent accountant will be able to complete your year end tax return for you, all you have to do is sign it. If you have a full time accountant you pay each month it's usually included in the service, if you don't you can pay for it as a one off charge.

If you absolutely cannot be bothered with 30 mins admin a month just to keep your records up to date and work out your dividend payments then stick with Giant. Otherwise you're better off as a Ltd.

[Harrysp]

Here are the calculations I have been given if I use an Umbrella...

http://www.mofomos.co.uk/bike/umbrella(2).xls

If I take more money by using my own LTD I am more than happy to do so, but this seems good for me...

I have always been advised against using an my own LTD, hence having used an umbrella, hence coming on here and asking questions.

Moff

That is the most absurd spreadsheet calculation I have ever seen. In one you get paid divi's (the Umbrella) in the other ALL of the 58.5k is paid out under PAYE FFS, of course you would be better under teh umbrella if you structured your LTD to pay everything out under PAYE.

[DaveB]

Here are the calculations I have been given if I use an Umbrella...

http://www.mofomos.co.uk/bike/umbrella(2).xls

If I take more money by using my own LTD I am more than happy to do so, but this seems good for me...

I have always been advised against using an my own LTD, hence having used an umbrella, hence coming on here and asking questions.

Moff

And there is your problem. Running a ltd as a contractor you dont pay everything out as PAYE salary. Any good accountant will tell you that the way to do it tax effeciently is to take a minimum salary - up to your annual tax allowance - and take the rest as dividends.

Up to the upper tax bracket ( 38.k pa I think ) dividends are effectivly tax free. Above the tax limit you pay %25 on earnings above the limit.

So, you pay yourself a minimal salary ~£750 pm, pay tax and NI on that ( bugger all really ) and take the rest as Divi's effectly tax free up to the upper earnings limit.

You will be far, far better off that way than either brolly or full PAYE. And yes it's perfectly legal. There is some debate on how much notice the tax man will take, this is debated at length else where on the forum, but *it is legal*.

To get a real idea of the differances use one of the many contractors calculators out there.

[Moff]

The PAYE bit was purely as an example... who wants to be PAYE

According to that link, I'll loose 2% extra in deductions..

Moff