Ltd company or Umbrella for inside-IR35 contract ?

[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

[VectraMan]

Ltd.

Did you mean to say connivence?

[northernladuk]

Did you mean to say connivence ?

I have a feeling he didn't.

[jack90]

I have a feeling he didn't.

Lol! Silly typo.

Could you please elaborate why Ltd company is better ?

Thanks

[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.

[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.

[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

[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

[northernladuk]

Time for a new accountant I think.

[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.