Really confused - Umbrella Vs Ltd company

[LisaContractorUmbrella]

Hi all,

Managed to secure a contract good rate (£500/day) IB and i have spoken with a few friends of mine (all invoicing thru umbrella) and they told me it's clean & you get on a average 63% and there is one man who gets 55% as he told once you have completed 2 years the net take home gets reduced....

Could someone clarify this piece...

Is it true that by running a LTD company can i increase my net home? assuming it's a ONE MAN DIRECTOR COMPANY which is me.

Thanks

Your friend who gets 55% would have the same problem whether he worked through his own Limited Company or through an Umbrella Company - when you have worked at the same location for 2 years or more OR you know that you will be working at the same place for 2 years you cannot claim for certain expenses that you would have been able to previously. If your contract falls outside IR35 (there is much information on this site about this legislation) then you would certainly be better off financially working through your own Limited Company; if you are inside IR35 and you are not sure that you want the responsibility of a Limited Company as soon as you start contracting then you would be better working through an umbrella company, at least initially.

[Wanderer]

Is it true that by running a LTD company can i increase my net home? assuming it's a ONE MAN DIRECTOR COMPANY which is me.

Oh yes. Check out the contractor calculators on the right side of the page. You can avoid even more tax if your spouse doesn't work and you make them a shareholder.

Also, please read the first timers guide on the right. You need to understand how people here use a limited company (small salary, the rest in dividends which don't attract as much tax), what IR35 is and if you can avoid it (don't presume you are IR35 caught!). Also VAT/Flat Rate.

If you are a complete beginner then I suggest you either go umbrella until you're established or join the PCG and get a package that includes LTD company, insurance and accountancy. DON'T set up a LTD company without having an accountant on board or you will get burned.

[Nixon Williams]

Hi all,

Managed to secure a contract good rate (£500/day) IB and i have spoken with a few friends of mine (all invoicing thru umbrella) and they told me it's clean & you get on a average 63% and there is one man who gets 55% as he told once you have completed 2 years the net take home gets reduced....

Could someone clarify this piece...

Is it true that by running a LTD company can i increase my net home? assuming it's a ONE MAN DIRECTOR COMPANY which is me.

Thanks

Whilst I am not aware of all your relevant facts, assuming that you are an IT contractor, exempt from IR35 and that you have NO expenses, then you would look to retain about 55% through a brolly and 69% through your own company. This is after the payment of accountancy/brolly fees.

If you do put expenses through the percentages will increase.

With your own company you can benefit from the VAT flat rate scheme and by paying dividends you can avoid NIC costs.

Alan

[badger7579]

Before the inevitable.......Did you make any effort to run a quick search or check out the first timers guide?????

[secontrator]

Hi all,

Managed to secure a contract good rate (£500/day) IB and i have spoken with a few friends of mine (all invoicing thru umbrella) and they told me it's clean & you get on a average 63% and there is one man who gets 55% as he told once you have completed 2 years the net take home gets reduced....

Could someone clarify this piece...

Is it true that by running a LTD company can i increase my net home? assuming it's a ONE MAN DIRECTOR COMPANY which is me.

Thanks