HELP!!!!!

[BendyKendy]

I am just about too embark on contracting for the first time.
Why do people tend to shun away from the Accountancy route and go the Umbrella route?
Are they better?? I just had one company call me and state they would take 15% of my weekly wages for their service which equates to over £150!
Anyone recommend a good umbrella company I was going to give Gary Barlow a call xx

[stek]

15 - who's sockie is this then? very poor!

[MyUserName]

Well I had a good training session tonight.

[Andrew at Boox]

Limited Company tends to be better

I am just about too embark on contracting for the first time.
Why do people tend to shun away from the Accountancy route and go the Umbrella route?
Are they better?? I just had one company call me and state they would take 15% of my weekly wages for their service which equates to over £150!
Anyone recommend a good umbrella company I was going to give Gary Barlow a call xx

Definitely check out the accountancy route and using your own Limited Company. Depending on your circumstances often the take home pay is much higher because you can earn dividends from your company that are effectively taxed at 0% (below £42,475). Plus you can pay yourself a salary at a level where you don't pay PAYE or NI either.

Ltd company accountancy services nowadays are cheaper because of all the online facilities that you get. A good contractor accountant will be able to give you an accurate comparison.

[LisaContractorUmbrella]

Definitely check out the accountancy route and using your own Limited Company. Depending on your circumstances often the take home pay is much higher because you can earn dividends from your company that are effectively taxed at 0% (below £42,475). Plus you can pay yourself a salary at a level where you don't pay PAYE or NI either.

Ltd company accountancy services nowadays are cheaper because of all the online facilities that you get. A good contractor accountant will be able to give you an accurate comparison.

Perhaps it would have been prudent to mention that these wonderful returns can only be gained if the contractor is outside IR35?

[Andrew at Boox]

Perhaps it would have been prudent to mention that these wonderful returns can only be gained if the contractor is outside IR35?

Indeed Lisa - thanks for pointing that out.

[LisaContractorUmbrella]

Anytime

[ASB]

Depending on your circumstances often the take home pay is much higher because you can earn dividends from your company that are effectively taxed at 0% (below £42,475).

True, but of course to get the money to pay the dividends it has already been subject to 20% corporation tax.

Outside IR35 the real saving comes from lack of NI on the dividend route.

[sunflower]

Check the limited scenario out and look at different umbrella companies. They don't all charge such huge fees. SJD has got a payroll option and I think it costs about 85 pounds per month.

Choosing a limited might depend on how much your contract is or how long you want to freelance. A limited might not be the most efficient solution if your contract value is less than 25k per year becuase of the added accountancy fees.

[Ticktock]

Having just come out of an Umbrella company and into my Ltd, I was pretty shocked when looking back and realising that I was only taking home about 65% of my invoices.
I think I retained more when I was a permie (although of course the rate was lower).
Now I'll just be on dividends for the rest of this tax year, then next year a small salary & dividends, and even considering CT will be taking home a lot more.