Umbrella VS limited company in public sector inside IR35?

[MonkeyDonkey]

I'm in IT and currently I'm being offered a position in the public sector inside IR35 via an agency and they gave me 2 options (exact wording):

Option 1. An umbrella route whereby you become an employee of the umbrella, with payroll taxes deducted at source.

Option 2. A payroll services route where you retain your PSC, with deemed payroll taxes deducted at source by the payroll supplier and the balance paid to your PSC.

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I work primarily in IT and then I hustle on some IT projects of my own and one unrelated hobby. I was a sole trader so far and on my tax return used expenses for all that. But now things start becoming more complicated and more unclear as I just opened a Limited and happen to have a contract outside IR35..

I have a few income streams:

• Very tiny outside IR35 gigs in IT. I did these as a sole trader but planning to use my Limited now.
• This contract. Long-term inside IR35 renewing contract with public sector starting end of summer.
• Pocket money from a side-hustle from my hobby - sole trader.
• 0 earning side projects. But I'll put the expenses for this under my Limited.

Tax year:

• Already made ~8k as a sole trader from IT projects.
• I will make about 5k in a small contract outside IR35 soon. Probably will go with my Limited.
• This initially 3mo contract inside IR35 @700/d extended to the end of tax year.

Expected expenses:

• Part of rent & bills (home office) + hardware for all outside IR35 gigs, side projects in IT.
• Part of rent & bills (home office) + hardware for my sole trader endeavour outside IT.

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With all this in mind should I use an umbrella for the public sector 700/d gig or my Limited?

The agency provided a list of umbrellas and I spotted some holiday pay there but not sure if this has or should have any effect on my decision. I also spoke with an accountant from cheapaccountancy but he gave me a quite generic answer that "umbrellas are less admin".

Any help is deeply appreciated since I'm not sure where I can get an advice on this anymore. I'm sure many other people are struggling with this as well.

[eek]

Avoid Deemed payments that's a world of pain.

You want an umbrella that does rolled up holiday pay so that it is paid as part of each monthly payment.

And look for one that like (Clarity) allows you to use Salary Sacrifice to put assignment fee income directly into your pension fund.

[northernladuk]

Avoid Deemed payments that's a world of pain.

You want an umbrella that does rolled up holiday pay so that it is paid as part of each monthly payment.

And look for one that like (Clarity) allows you to use Salary Sacrifice to put assignment fee income directly into your pension fund.

Seconded and would also call Clarity first thing as well.

[SimonMac]

1 is the easiest
2 won't happen as no agencies what work with PS clients will accept it

[MonkeyDonkey]

1 is the easiest
2 won't happen as no agencies what work with PS clients will accept it

So the 2 options were given to me directly by the agency.. so I guess it works in this case? But it makes it all more confusing since I'll need to get the money out then somehow and I don't see how this can work since it's already taxed

[MonkeyDonkey]

Avoid Deemed payments that's a world of pain.

You want an umbrella that does rolled up holiday pay so that it is paid as part of each monthly payment.

And look for one that like (Clarity) allows you to use Salary Sacrifice to put assignment fee income directly into your pension fund.

Thank you for your answer. Does that mean that I get paid every month the same and I can take 28 days off anytime? What happens if I don't take the holiday pay? Do I need to then work all the days? (In which case I guess I get more income?)

[eek]

Thank you for your answer. Does that mean that I get paid every month the same and I can take 28 days off anytime? What happens if I don't take the holiday pay? Do I need to then work all the days? (In which case I guess I get more income?)

The £700 rate you are being offered is a daily assignment rate that includes holiday pay - you won't get paid for days off or holiday....

[MonkeyDonkey]

The £700 rate you are being offered is a daily assignment rate that includes holiday pay - you won't get paid for days off or holiday....

OK, this is confusing. So say the contract is 6 months, does that mean that I will be paid for about 5 months at the day rate? Aka my gross income is 5*20*rate for a 6mo contract?

[eek]

OK, this is confusing. So say the contract is 6 months, does that mean that I will be paid for about 5 months at the day rate? Aka my gross income is 5*20*rate for a 6mo contract?

Nope you are paid for just the days you work. Every day you work you earn £700, every day you don't work you earn £0.

[northernladuk]

Thank you for your answer. Does that mean that I get paid every month the same and I can take 28 days off anytime? What happens if I don't take the holiday pay? Do I need to then work all the days? (In which case I guess I get more income?)

The brolly will hold some of the money back for holiday pay and then if you have time off they will pay you it, if not you claim it back at the end.

But just forget about the process of it. As Eek says you will earn 700 a day if you work and nothing if you don't. The rest is jiggerpokery with the money you got. You don't get any free money for holidays, sick or anything else. It all comes out of your rate.

Pick a brolly and go speak to them. They will explain it all.