Everything you ever wanted to know about umbrella companies but were afraid to ask...

[ASB]

Ive heard that you can lose a lot of money going with an umbrella company? what percentage do they take?
(im new to all this, its just good to know my options)

If by "lose a lot of money" you mean "apply all the deductions that are due based on uk emoyment law" then yes. But that doesnt fit any definition of loss.

[ContrataxLtd]

Would I be right in thinking that there isn't much difference in take home between Umbrella and Ltd inside IR35?

You are correct, there isn't much difference. Normally around 5% or so depending on Umbrella fees, accountancy fees, level of expenses and daily rate.

The benefit of Ltd when IR35 caught is you still get a 5% allowance that doesn't have to be taken as salary and can benefit from the flat rate VAT scheme (turnover dependent), plus you don't have another link in the chain controlling your money.

On the flip side, there are benefits of using an Umbrella (a good one) as it reduces the perceived 'hassle' of running a Ltd when the difference in take home pay isn't too difference.

[ASB]

What is a typical return for Umbrealla vs Ltd?

On 100k a year brolly about 58.5%. Ltd inside ir35 about 62%.


Outside ir35 about 75%. If married and agressive a bit more.

All depends on your individual position and rate.

[LisaContractorUmbrella]

Would I be right in thinking that there isn't much difference in take home between Umbrella and Ltd inside IR35?

Not a lot at all

[ASB]

Not a lot at all

Low rate and infrequent work you could be worse off. Brolly charges could be lower than ltd overheads.

the 5% is largely irrelevant. It is subject to ct. If you are a higher rate taxpayer and dont draw it then you save a bit. If you do draw it then then tax is paid making it broadly the same. There is overall a modest ni saving which would amount to about 0.5%.

If flat rate vate this adds about 2.5%.

If rate below about 250 vat threshold and in ir35 then brolly seems the pragmatic choice unless mitigating through large employer pension contributions which some brollys cannot cope with.

[LisaContractorUmbrella]

Low rate and infrequent work you could be worse off. Brolly charges could be lower than ltd overheads.

the 5% is largely irrelevant. It is subject to ct. If you are a higher rate taxpayer and dont draw it then you save a bit. If you do draw it then then tax is paid making it broadly the same. There is overall a modest ni saving which would amount to about 0.5%.

If flat rate vate this adds about 2.5%.

If rate below about 250 vat threshold and in ir35 then brolly seems the pragmatic choice unless mitigating through large employer pension contributions which some brollys cannot cope with.

An excellent summation my dear fellow

[Martin Bugler]

Umbrella company

I started doing a few days a week through an agency, they advised me to set up a Limited company.... biggest mistake of my life, time consuming and costly. I know it was due to my errors but I received large fines for stuff I didn’t know about. I should have done my research really but my consultant said Its good to have a Ltd company.. Maybe for some.

After looking though the net for an alternative pay solution and I came across Umbrella companies... not sure why my consultant mentioned this before would have saved me a few quid in fines. I spoke to my consultant and he referred me to a few ones he knows of but as I know consultants work on a referral basis I took it on my own head to search the Net for a good umbrella company. After a few days of calling and calculations I came across a company called Paraffin Umbrella. In my opinion these guys stood out to me, extremely helpful and by far the cheapest company I had came across just £13.00 a week providing I actually work, how I could refuse, they even sorted out all my previous bother with my Ltd company.
I have been dealing with Paraffin for over 8 Months now and I can honestly say that the service has been A star****
Payslips and money is there every week on time. Sometimes I need paying early and they do it no questions asked, great company. For any one contracting and thinking about going Umbrella call these guys there great.
w ww.paraffingroup.co.uk

[cojak]

I started doing a few days a week through an agency, they advised me to set up a Limited company.... biggest mistake of my life, time consuming and costly. I know it was due to my errors but I received large fines for stuff I didn’t know about. I should have done my research really but my consultant said Its good to have a Ltd company.. Maybe for some.

After looking though the net for an alternative pay solution and I came across Umbrella companies... not sure why my consultant mentioned this before would have saved me a few quid in fines. I spoke to my consultant and he referred me to a few ones he knows of but as I know consultants work on a referral basis I took it on my own head to search the Net for a good umbrella company. After a few days of calling and calculations I came across a company called Paraffin Umbrella. In my opinion these guys stood out to me, extremely helpful and by far the cheapest company I had came across just £13.00 a week providing I actually work, how I could refuse, they even sorted out all my previous bother with my Ltd company.
I have been dealing with Paraffin for over 8 Months now and I can honestly say that the service has been A star****
Payslips and money is there every week on time. Sometimes I need paying early and they do it no questions asked, great company. For any one contracting and thinking about going Umbrella call these guys there great.
w ww.paraffingroup.co.uk

Really?

(Umbrella) Companies: check them out BEFORE they go wrong!

Google registered office site: paraffingroup.co.uk

Or maybe

VAT site: paraffingroup.co.uk

Then decide rather than just take the word of a 1 post punter...

[TheFaQQer]

I started doing a few days a week through an agency

It wasn't Better Care Recruitment was it?

I have been dealing with Paraffin for over 8 Months now and I can honestly say that the service has been A star****

Could you explain how you've been with Paraffin for over 8 months when they were only incorporated on 12 September 2013? I calculate that as 7 months and 17 days. I'd therefore question the claim on their website that "Paraffin Umbrella is one of the most successful Umbrella companies in the UK."

Paraffin was set up last year and has one current director, who is the grand old age of 24. If I was ever going to go umbrella, I'd be wanting a more experienced management team to be looking after my money.

[TheFaQQer]

Really?

(Umbrella) Companies: check them out BEFORE they go wrong!

I'd also add that it's worthwhile checking on Google maps and streetview where the registered office is. For example, here's the head office of Paraffin Group:

https://maps.google.com/maps?q=48+Be...bp=12,315,,0,0