Reply to: Free Stuff With An Umbrella Company

[malvolio]

whats so bad about using a brolly? Would'nt the cost/hassle of registering as ltd, having an accountant and filing a tax return be alot of effort?

Ok so you pay a small fee but especially if you're working short term contracts (month or two here and there under £200 a day). Why is an umbrella such a bad decision?

If you're firmly inside IR35 territory, commercially there's little in it, especially at the lower end of the income scale. Nobody's saying don't use a brolly then. Even so, you could get better cashflow and flexibility through a limited than through a brolly, especially if you're working overlapping contracts.

Otherwise, because you pay 20% more tax than you need to? Because brolly fees are usually higher than accountants' fees? Becuase you don't get the flexibililty around purchasing and expensing? Because you're working for someone else and following their often arbitrary rules?

Nuff said?

[assclown]

whats so bad about using a brolly? Would'nt the cost/hassle of registering as ltd, having an accountant and filing a tax return be alot of effort?

Ok so you pay a small fee but especially if you're working short term contracts (month or two here and there under £200 a day). Why is an umbrella such a bad decision?

[Fred Bloggs]

He was talking about dispensation again the other day and the "bonus" he gets each day for being out of the house for more than 10 hours (£30 or whatever it is). It's ok though, he's got it in writing from the umbrella so all liability is waived scary.

Do not fall into the trap of believing a dispensation gives you a "right" to tax free cash. It does not. You must be able to produce a receipt to prove expenditure was incurred if asked to by HMRC. A dispensation merely means that certain expenses do not need to be reported on your P11D. I think some brollies are seriously misrepresenting their dispensations in a sort of "nudge, wink, tax free cash...." type of way. I see suggestions made that a £100/day is yours for the taking. This sort of advertising is misguiding at best, IMO.

[Hemingfield]

Will you two get a room!

[miffy]

Using a brolly merely makes you another PAYE temp like the girl from Office Angels.

That's the point I was trying to make

[malvolio]

...I've always associated contracting with self employment and therefore you're independant and in business. ...snip...

No, that is not a valid association. In business means you carry business risk and you control all of your own affairs. Using a brolly merely makes you another PAYE temp like the girl from Office Angels. Fine if that's how you want to work, but don't confuse it with being in business.

[miffy]

miffy's peculiar attitude is misinformed.

Maybe. I'm not being negative towards umbrellas or the use of them, just I've always associated contracting with self employment and therefore you're independant and in business. I feel theres some kind of pride in that too (is that just me?).

When I decided to jump permiedom I looked at brollies myself. I just couldn't get my head round becoming an employee of the brolly (contractor co.). So therefore I am technically working for the brolly and they pay me for temporary assignments done through them under their contracts and T&C's. The purchase of equipment (covered earlier in this thread) also put another nail in the coffin for me. Buying equipment for someone else? what?

Each to their own and you do what's right for your own peronal circumstances at the end of the day. I do agree with malvolios comment on some contractors being lazy though and using brollies purely for that reason. They have even admitted it to me.

[miffy]

I am self employed - what is wrong with that?

Nothing if you're an electrician

[TheFaQQer]

Then read the first timer guide. Rad the forum these questions have been asked before, times.

Young youngsters with your slang, eh!

Rad the website - totally gnarly, dude.

[NickFitz]

I'm still amazed at how many contractors I've worked with are using brollies.

I'm gonna get flamed for saying this, but if you don't have a limited you're not a real contractor are you?

If you don't own your own company, you're employed by someone else. You are therefore, by any definition you care to use, an employee. You have no responsibility for your Tax and NIC payments different to any other employee. You may be a contractor, but you are not in business. And you are making the usual mistake of merging Contractor and Director and ContractorCo - they are different legal beings with different legal requirements

I was answering miffy's question, and you clearly agree that owning a Ltd is not a requirement for being a "real" contractor - and that, therefore, miffy's peculiar attitude is misinformed.

[BrilloPad]

I'm still amazed at how many contractors I've worked with are using brollies.

I'm gonna get flamed for saying this, but if you don't have a limited you're not a real contractor are you?

Anyone got any petrol?

I am self employed - what is wrong with that?

[Sockpuppet]

Uh, pass? Look, I am new to contracting

Then read the first timer guide. Rad the forum these questions have been asked before, times.

[malvolio]

You are HMRC and I claim my £5.

Seriously, if you work as a contractor, you are a contractor. What arrangements you prefer to make to establish your employment status and take care of your payroll and tax/NI liability has nothing to do with it.

If you don't have your own company then you are not the owner of a company. That's it.

If you don't own your own company, you're employed by someone else. You are therefore, by any definition you care to use, an employee. You have no responsibility for your Tax and NIC payments different to any other employee. You may be a contractor, but you are not in business. And you are making the usual mistake of merging Contractor and Director and ContractorCo - they are different legal beings with different legal requirements

[NickFitz]

I'm still amazed at how many contractors I've worked with are using brollies.

I'm gonna get flamed for saying this, but if you don't have a limited you're not a real contractor are you?

You are HMRC and I claim my £5.

Seriously, if you work as a contractor, you are a contractor. What arrangements you prefer to make to establish your employment status and take care of your payroll and tax/NI liability has nothing to do with it.

If you don't have your own company then you are not the owner of a company. That's it.

[LisaContractorUmbrella]

Uh, pass? Look, I am new to contracting, and I know a guy who is contracting with an umbrella company who says he can give them stuff like receipts from taxi rides and purchases of hardware and stuff, and he can claim he needed it to do his job, and therefore make his income, and so he gets that much money off the tax he has to pay.

Now I don't know if he's perhaps doing the wrong thing, or maybe what he's doing will come back to haunt him - I just want to know from any existing umbrella contractors with experience (sort of why I'm here), is this genuine... Can I do that, just save receipts from computer purchases and stuff and take that money off my year tax bill?

Do I need a LTD to do that or can I do that with an umbrella company?

Thanks...

If you claim any cost as an expense whether it be through your own company or through an umbrella company you must be able to prove that the cost is entirely, wholly and exclusively caused by the contract i.e. is a genuine cost of business. If you have not incurred the cost and you cannot prove that it is a cost of business don't claim it. Also, an expense claimed in this way is a tax benefit which means that you get tax relief on the amount claimed it does not mean that you get the full cost back.

HTH