Switching from an umbrella to a limited company ? Is this possible please HELP

[Anonimouse]

Parasol

Was approached today for a PS role and was pushed towards parasol as they will allow you claim expenses. Really not sure what they are up to.

[original PM]

FWIW, if the threads around here on Parasol are to be believed, it could be a little of both (but mainly a misunderstanding of Employer's NI, of course).

It is often a cumulation of

1) The brollies fees
2) No P45 so being put on a base rate/week 1 taxcode
3) Not claiming or being allowed to claim the expenses they maybe said you could.
4) Employers NI - which is paid on your behalf by your employer.

Out of these 2 will sort itself out assuming you get a p46 in - although if it is near the end of the tax year you will need to claim it back from HMRC.

One of the key things to understand is that your hourly rate is not your hourly rate - that is the rate the brolly is charging you out at.

The brolly then commits to pay you your salary after all the relevant deductions from the money they received from the agency for you.

In essence if you cannot claim expenses as is often the case you may be better of as standard PAYE.

[ladymuck]

There shouldn't be any issue with switching from umbrella to your own LtdCo. You just incorporate and set up a bank account and then tell the agency to reissue the same contract with YourCo's name rather than Parasol's on it. It's no different than if you changed umbrellas. I suspect you're using the agency recommended umbrella and they don't want to lose their cut.

[jamesbrown]

The umbrella is not taking a lot of your money

FWIW, if the threads around here on Parasol are to be believed, it could be a little of both (but mainly a misunderstanding of Employer's NI, of course).

[RonBW]

As I told the recurtier I wanted to change they said unless the contract is reissued and my role changes this would not be possible !

The first part is correct - you will need a new contract because the contract at the moment is between agency and umbrella.

The second part is not correct - your role doesn't need to change. But you might need to consider the IR35 implications of changing from being an umbrella employee doing the job and doing the same job via your own limited company. The chances of you winning an investigation if one ever came up are negligible.

[LondonManc]

The umbrella is not taking a lot of your money - HMRC is taking it from the Employers NI, Employees NI and income tax you are paying..

Parasol will be deducting a small fee for the work they are doing without looking around £30 a week.

+1

OP, have a look through this thread for details:
http://forums.contractoruk.com/umbre...ey-differ.html

[LondonManc]

If you find an umbrella company that lets you keep most of your money, you'll find (even if they have QC approval for their scheme) a few years later that the tax man will come to you for a large chunk of what you thought you'd saved + interest + penalties.

Ah, be careful. That's not the answer the OP wanted.

OP, I switched from umbrella to limited at the same client many years ago but it was when an extension was offered. The agent was a good guy and I had a good relationship with him. I told him in advance that I was switching to a limited so he had the relevant extension contract drawn up.

[teapot418]

Hi fellow contractors,

I have been contracting for a short space of time 6 months. I assumed after a conversation with the recuriter that it would be possible to switch from an umbrella to a limited company.

As I told the recurtier I wanted to change they said unless the contract is reissued and my role changes this would not be possible !

They said this is based on HMRC compliance issues that this was not possible. They said if I had a limited company I could switch to unmbrella but not the other way round.

The umbrella is taking a lot of my money , and if I can't switch can anyone recommend a umbrella that actually lets you keep most of your money.

Any help would be ver much appreciated the recruiter is reed and the umbrella parasol.

Are you working in the public sector?

[eek]

Hi fellow contractors,

I have been contracting for a short space of time 6 months. I assumed after a conversation with the recuriter that it would be possible to switch from an umbrella to a limited company.

As I told the recurtier I wanted to change they said unless the contract is reissued and my role changes this would not be possible !

They said this is based on HMRC compliance issues that this was not possible. They said if I had a limited company I could switch to unmbrella but not the other way round.

The umbrella is taking a lot of my money , and if I can't switch can anyone recommend a umbrella that actually lets you keep most of your money.

Any help would be ver much appreciated the recruiter is reed and the umbrella parasol.

The umbrella is not taking a lot of your money - HMRC is taking it from the Employers NI, Employees NI and income tax you are paying..

Parasol will be deducting a small fee for the work they are doing without looking around £30 a week.

[NotAllThere]

If you find an umbrella company that lets you keep most of your money, you'll find (even if they have QC approval for their scheme) a few years later that the tax man will come to you for a large chunk of what you thought you'd saved + interest + penalties.

[sams]

Hi fellow contractors,

I have been contracting for a short space of time 6 months. I assumed after a conversation with the recuriter that it would be possible to switch from an umbrella to a limited company.

As I told the recurtier I wanted to change they said unless the contract is reissued and my role changes this would not be possible !

They said this is based on HMRC compliance issues that this was not possible. They said if I had a limited company I could switch to unmbrella but not the other way round.

The umbrella is taking a lot of my money , and if I can't switch can anyone recommend a umbrella that actually lets you keep most of your money.

Any help would be ver much appreciated the recruiter is reed and the umbrella parasol.