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Salary vs Umbrella

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    Salary vs Umbrella

    This might sound like a newb question but I'm in a slightly unusual situation. I did mention this in another thread but probably should have asked this bit separately in the first place.

    I've just closed down my own company before the ESC C16 change as I joined another start up last year which looks like getting a contract that will pay better than me on my own. I'm only a partial shareholder but at present, while we wait for things to take off, most of the other guys are still contracting through their own companies while I was benched in January so I'd be the only one generating income (from my short contract) for now so the others agree.

    Now things have been delayed, as they always are, so I could use the time to get another short contract until things pick up in maybe 3 months.

    Would there be much of a financial advantage in going through the start up (a registered software services company) and paying my contract income as salary/bonuses or would I be better off just using an Umbrella?

    I don't expect a full answer with all the variables, just a recommendation.

    #2
    Originally posted by Funkywood View Post
    This might sound like a newb question but I'm in a slightly unusual situation. I did mention this in another thread but probably should have asked this bit separately in the first place.

    I've just closed down my own company before the ESC C16 change as I joined another start up last year which looks like getting a contract that will pay better than me on my own. I'm only a partial shareholder but at present, while we wait for things to take off, most of the other guys are still contracting through their own companies while I was benched in January so I'd be the only one generating income (from my short contract) for now so the others agree.

    Now things have been delayed, as they always are, so I could use the time to get another short contract until things pick up in maybe 3 months.

    Would there be much of a financial advantage in going through the start up (a registered software services company) and paying my contract income as salary/bonuses or would I be better off just using an Umbrella?

    I don't expect a full answer with all the variables, just a recommendation.
    Paying a salary would be normal salary taxes. Using a brolly would be that + umbrella fees. If you can, assuming there are no fees from your accountant to do the wages, just do it through your company.
    ContractorUK Best Forum Adviser 2013

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      #3
      I should have guessed it would be that simple.

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