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TotalAfol
5th February 2014, 23:33
Hi Guys

I am currently winding up a business that went bust. It's taking longer than I had hoped due to a number of factors. But I need to get an income sorted. I've been offered some work contracting and I'm not sure the best way to start off. The contract I'm considering is temporary and isn't likely to continue after 3 months. During this time I will be looking for other work and am likely to take employment over contracting. So I'm unsure whether I need to employ the services of an Umbrella company or, if I only need to do this once my earnings go over the HMRC's 'Personal Allowance'? I did not draw a wage on the previous company, so effectively have not yet earned this year. My gut feeling is that I would still need to declare that money, but not sure how I would do it?

I would appreciate some help, I can't seem to find the right combination of search terms for this situation.

Craig at Nixon Williams
6th February 2014, 09:01
Most companies/agencies that engage with contractors will want to do so through some sort of incorporated body (due to the limited liability status of such an entity) - usually this will be an umbrella or your own company. For short term work, stick to an umbrella.

Craig

LisaContractorUmbrella
6th February 2014, 09:41
Agree with Craig - you should just be aware that you will have no entitlement to tax relief on travel expenses if you only have a single assignment with an umbrella company - but it is certainly the best option in your circumstances.

TotalAfol
6th February 2014, 21:08
Thanks for your advice.

Speaking to some colleagues today, most seem to be setup as Sole Traders. I'm not sure I understand the difference between being an LTD over Sole Trader?

LisaContractorUmbrella
7th February 2014, 09:31
Thanks for your advice.

Speaking to some colleagues today, most seem to be setup as Sole Traders. I'm not sure I understand the difference between being an LTD over Sole Trader?

That's unlikely to be an option moving forward - the false self employment legislation will mean that sole traders who currently work through an intermediary will need to be paid through full PAYE rather than paying income tax and class 2 and 4 NIC's https://www.gov.uk/government/consultations/onshore-employment-intermediaries-false-self-employment