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Madge67
15th February 2017, 12:18
Hi everyone,

I'm new to the forum but have been browsing the threads over the last few days trying to get my head around what we should do. Apologies if the answer is out there already but I'm having trouble finding it.

Both myself and hubby are about to start on our contracting journey and have secured contracts through the same agency. As the contracts both fall under ir35 and taking into account the changes, we are totally confused as whether to go with an umbrella company or set up as LTD. We wont be earning a huge amt (£18.00 ph) and I don't mind any admin that comes with being a LTD company so I guess its down to which option will make us better off (if any). As I understand it we wont be able to pay minimum wage + dividends any more and so the LTD route may not be the better option but at the same time I begrudge paying out the fees and Employer NI payments you have to pay using an umbrella.

I wish we could find equivalent private sector contracts but the nature of our work makes this impossible.

Thanks

Madge x

eek
15th February 2017, 12:34
Hi everyone,

I'm new to the forum but have been browsing the threads over the last few days trying to get my head around what we should do. Apologies if the answer is out there already but I'm having trouble finding it.

Both myself and hubby are about to start on our contracting journey and have secured contracts through the same agency. As the contracts both fall under ir35 and taking into account the changes, we are totally confused as whether to go with an umbrella company or set up as LTD. We wont be earning a huge amt (£18.00 ph) and I don't mind any admin that comes with being a LTD company so I guess its down to which option will make us better off (if any). x

As you are inside your best approach is to try and go PAYE directly through either the client or through your agency.

If that's not possible then while you could use a limited company I can't see much benefit unless you actually know what you are doing but I can see why 2 lots of £25 a week umbrella fees isn't that attractive.

Neil@Intouch
15th February 2017, 12:42
Following on from eek, it could be worth combining the two contracts through a Ltd Company, register under the flat rate VAT scheme (changes also happening post April 2017), and you would benefit from a lower fee to an Accountant monthly than Umbrella fees for both of you. Plus potentially increased profit of around £500 each, based on the hourly rate (40 hours per week), 48 weeks per annum on the flat rate VAT scheme of 15.5% (cost trader category less 1% discount).

You will still be able to get a benefit of a lower rate for 6 weeks on the flat rate scheme that matches your main activity.

eek
15th February 2017, 12:50
Following on from eek, it could be worth combining the two contracts through a Ltd Company, register under the flat rate VAT scheme (changes also happening post April 2017), and you would benefit from a lower fee to an Accountant monthly than Umbrella fees for both of you. Plus potentially increased profit of around £500 each, based on the hourly rate (40 hours per week), 48 weeks per annum on the flat rate VAT scheme of 15.5% (cost trader category less 1% discount).

You will still be able to get a benefit of a lower rate for 6 weeks on the flat rate scheme that matches your main activity.

Downside of that is that the accountancy fees would be coming out of their taxed income (until they got a contract outside IR35) whilst at least an umbrella fee is deducted before tax.

Granted on the fixed rate scheme the £20 or so a week they would receive in year one would just about cover the accountancy fees, the £6 they got from year 2 onwards definitely wouldn't

So yep limited is an option but I really would be insisting on the agency taking you on PAYE (come April once one agency offers PAYE others will have to follow).

northernladuk
15th February 2017, 12:55
Just a pedantic point. The terms you are looking for are inside or outside IR35, not under.

cojak
15th February 2017, 13:01
I agree with eek - contractor accountancies will be fighting for their survival but I would go with a reputable umbrella instead/agency PAYE* instead.

Why have the hassle of a Ltd if you don't get the benefit?

(Although I would want assurance that the agency wouldn't go bust with my money, so it might be just a reputable umbrella...)

eek
15th February 2017, 13:07
I agree with eek - contractor accountancies will be fighting for their survival but I would go with a reputable umbrella instead/agency PAYE* instead.

Why have the hassle of a Ltd if you don't get the benefit?

(Although I would want assurance that the agency wouldn't go bust with my money, so it might be just a reputable umbrella...)

Given that the money has to go through the agency before reaching the umbrella I don't actually see much difference in risk between the two options. Both depend on when agencies do payment runs and they may actually correspond.

sal
15th February 2017, 13:20
Keeping an existing ltd. for PS IR35 caught contract makes sense ins some cases.

Opening a new ltd. for first time PS IR35 caught contract makes no sense. Umbrella fees are more or less on par with accountancy fees, granted in this case 1 ltd. fee vs 2 umbrella fees this is not exactly on par. but when you add the responsibility and hassle of being a ltd. Director, for me the choice is clear.

So it's either ask for ClientCo agency PAYE or umbrella.