Ltd company or Umbrella for inside-IR35 contract ?

[lucyclarityumbrella]

I have a Ltd but for my next contract I'll be using ContractorUmbrella, which has a very good rep on here. Intend taking advantage of the pension contribution side of things to make the pain of being inside IR35 a bit less taxing.

Thanks Hobosapien The pension is one of the only decent tax savings nowadays, and our group pension scheme has no exit fees, so if you have an existing pension you can benefit from the salary sacrifice through ourselves and then look to transfer it after. HTH

[psychocandy]

I'm in the same position. Used ltd for years and current gig is inside IR35 public sector.

Signed up with umbrella so its easy enough and you get paid directly. Accountants have been good enough to charge 1/2 fees while Im doing this.
One problem I found is pension. Umbrella are obliged to provide a pension but will only do minimum (1%). I was hoping to chuck a bundle into a pension - might as well. Only thing the offer is AVC but this sort of defeats the object a bit.

Agency will consider PAYE but only via another company (paystream) and cost is same as an umbrella. If I did this money would get decucted then go into ltd who could then pay me directly. Trouble is accountant would want full fees then (despite not doing payroll) so it would cost a few quid more (not much - £10 a week or so).

To be honest, Im currently looking into it or at least trying to find an umbrella that allows more of a pension contribution and/or childcare vouchers.

[Numbermill]

^^^ This any role I have been offered in public sector the agency has only offered Umbrella or PAYE Ltd is out the window

We're trying to change this but many agencies are under little commercial pressure to push back against the "blanket bans" their clients have put in place. Placements are still being filled. Contractors are still going to work. If the rate goes up, the charge has also gone up so no financial hit to them.

Updated NHS guidelines means the Trusts "should" start individually assessing Ltd Company contractors and a few recruiters have suggested that where the NHS goes, other Public Sector Bodies will follow.

Depending on who you're working with, it could be worth requesting an IR35 assessment and seeing if you can get signed off for Gross payments. We've had a bit of success, but that's cos we love a scrap

Rob@Numbermill

[Hobosapien]

Fortunately, my agency offered me to use an umbrella or keep my PSC (they will handle PAYE).

Check how much the agency will charge to handle the PAYE. It won't be free of charge and may be more than an umbrella.

Also, if they're handling PAYE they'll be paying you personally so no need or point having them pay your Ltd and all the extra hassle with accounting that would entail.

So if you want pension contribs pre-PAYE/NI then agency will need to handle it, if they offer that.

Hence why using an umbrella may be a better option even though it means adding another link in the chain between client and yourself.

[northernladuk]

Time for a new accountant I think.

[jack90]

Thanks all for the replies.

Fortunately, my agency offered me to use an umbrella or keep my PSC (they will handle PAYE). My accountant doesn't seem familiar with IR35 and their software doesn't support it at the moment.

As my company will get taxed income from the agency, I expect that I will withdraw the whole amount without worrying about any further taxes. Is that assumption correct ?

In that scenario, how pension is handled ? is it the agency responsibility ?

Thanks

[Yonmons]

If public sector (presuming it is as we are in that sub forum) then the agency may require you to use an umbrella rather than ltd so they don't have to handle the payroll, as they aren't allowed to pay your LTD gross and trust you and your accountant to pay the tax correctly.

I have a Ltd but for my next contract I'll be using ContractorUmbrella, which has a very good rep on here. Intend taking advantage of the pension contribution side of things to make the pain of being inside IR35 a bit less taxing.

^^^ This any role I have been offered in public sector the agency has only offered Umbrella or PAYE Ltd is out the window

[Hobosapien]

If public sector (presuming it is as we are in that sub forum) then the agency may require you to use an umbrella rather than ltd so they don't have to handle the payroll, as they aren't allowed to pay your LTD gross and trust you and your accountant to pay the tax correctly.

I have a Ltd but for my next contract I'll be using ContractorUmbrella, which has a very good rep on here. Intend taking advantage of the pension contribution side of things to make the pain of being inside IR35 a bit less taxing.

[VectraMan]

Could you please elaborate why Ltd company is better ?

Get to keep the 5%*
Do what you want with pensions, which is the best way to avoid the tax.
Keep any FRS gain in the unlikely event there is one.
No umbrella fee to pay.
You're in charge of chasing any bad debts if it comes to that.

negatives:
Hassle of running a Ltd.
Insurance + bank charges.

Of course I'm assuming you do the work yourself. If you're going to hand over more to an accountant than the umbrella costs then it may be different.

*If not in public sector. I don't really know how PS contracts work now to be honest.

[jack90]

I have a feeling he didn't.

Lol! Silly typo.

Could you please elaborate why Ltd company is better ?

Thanks

[northernladuk]

Did you mean to say connivence ?

I have a feeling he didn't.

[VectraMan]

Ltd.

Did you mean to say connivence?

[jack90]

Hi All,

Need an informed opinion here please. I have an offer for inside-IR35 client which is few min away from home, the money isn't too bad for the connivence.

Which is better financially ? to stick with my ltd company or to use an umbrella company ?

Thanks in Advance