Umbrella Vs FTC Umbrella Vs FTC
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Thread: Umbrella Vs FTC

  1. #1

    Nervous Newbie


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    Default Umbrella Vs FTC

    Hi, I am new to this forum.

    Post 29th Feb, my client has suggested to have fixed term contract (FTC) than going via umbrella. As per them, it'll be much beneficial than via Umbrella. No detailed calculations/discussion has taken place. I have asked for sample calculations and waiting...

    Was wondering if anyone has got this option? Pros cons, what your advice?

  2. #2

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    Both options have been discussed endlessly so before we have to go through the basics of what these are you need to do some of your own research and understand how you are going to be employed. Once you've done the absolute minimum you can come back and ask some questions.

    Use the Google search method to find threads on these topics.

    Tyoe the following in to Google.

    (keyword) site:forums.contractoruk.com

    One you've understood both options you answer will be crystal clear.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  3. #3

    Contractor Among Contractors


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    Quote Originally Posted by Clarkston View Post
    Hi, I am new to this forum.

    Post 29th Feb, my client has suggested to have fixed term contract (FTC) than going via umbrella. As per them, it'll be much beneficial than via Umbrella. No detailed calculations/discussion has taken place. I have asked for sample calculations and waiting...

    Was wondering if anyone has got this option? Pros cons, what your advice?
    Without giving more details, such as the day rate for Umbrella (and whether that is gross or net of employer deductions) and the FTC terms, I'm not sure how you can expect anyone to give any advice.

    When you say beneficial, are you talking about pure financial considerations or also things like employee rights, benefits etc?

    If you want to understand your legal protection under either, a quick google with point you to articles that will be more detailed than any quick response here will be.

  4. #4

    Fingers like lightning


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    Quote Originally Posted by northernladuk View Post
    Both options have been discussed endlessly so before we have to go through the basics of what these are you need to do some of your own research and understand how you are going to be employed. Once you've done the absolute minimum you can come back and ask some questions.

    Use the Google search method to find threads on these topics.

    Tyoe the following in to Google.

    (keyword) site:forums.contractoruk.com

    One you've understood both options you answer will be crystal clear.
    what are you doing post-April?

  5. #5

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    Quote Originally Posted by heyya99 View Post
    what are you doing post-April?
    Doing an entirely different Google search, I'd imagine

  6. #6

    More time posting than coding


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    Quote Originally Posted by northernladuk View Post
    Both options have been discussed endlessly so before we have to go through the basics of what these are you need to do some of your own research and understand how you are going to be employed. Once you've done the absolute minimum you can come back and ask some questions.

    Use the Google search method to find threads on these topics.

    Tyoe the following in to Google.

    (keyword) site:forums.contractoruk.com

    One you've understood both options you answer will be crystal clear.
    Half the time when I Google things these days I just end up with forum posts when someone has asked the question I have in a perfectly reasonable and polite way, and all the answers are people telling the OP to 'do their research' or 'just f***ing Google it'. It's deeply unhelpful and doesn't serves no purpose except giving the responder a warm smug feeling.

  7. #7

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    Given that we don't have an FAQ on this let's repeat the answers at

    https://www.contractoruk.com/forums/...breakdown.html

    Given an unchanged budget a £500 a day outside IR35 contract would give you a PAYE daily rate of £380.

    That lower rate is because Employers NI has been deducted and holiday pay retained. and suggest you should keep 76% of the previous pay. I say this so that it's clear - PAYE rates should be approximately 72-78% of the umbrella / ltd company rate

    Using an umbrella makes sense if you want to maximise your pension contributions see https://www.contractoruk.com/forums/...-umbrella.html but otherwise PAYE will be better as you will avoid the umbrella fees. The ideal solution is PAYE where salary sacrifice is possible and the employer pays the Employer NI savings into the fund but I'm not sure how likely that is - ask though as you never know.

    Finally check what pension company the umbrella company uses. And especially avoid umbrella company offering NEST as they charge a 1.8% initial investment fee
    Last edited by eek; 16th January 2020 at 08:13.
    merely at clientco for the entertainment

  8. #8

    Should post faster


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    Thanks for that eek, it was really useful.

    And for anyone worried they might never find those threads again, and doesn't know this already, at the top of a thread you can choose Thread tools -> Subscribe to this thread and it'll save it in a folder which you can easily get to via Control Panel->Subscriptions

  9. #9

    Nervous Newbie


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    Ok. I have been given these sample calculations for the rate of £500 per day.

    FTC:
    £1,13,000 per year. This has been broken into two parts as 100K as main salary and 13K as holiday benefit. I'd get 2.5 days a month holiday as well.

    Umbrella - coming to be almost same but about £200 more on monthly basis.

    I see FTC as better option purely because of holidays and less paperwork overhead.

  10. #10

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    Quote Originally Posted by Clarkston View Post
    Ok. I have been given these sample calculations for the rate of £500 per day.

    FTC:
    £1,13,000 per year. This has been broken into two parts as 100K as main salary and 13K as holiday benefit. I'd get 2.5 days a month holiday as well.

    Umbrella - coming to be almost same but about £200 more on monthly basis.

    I see FTC as better option purely because of holidays and less paperwork overhead.
    Something doesn't sound right there. FTC is normally a permie rate pro rata. I've never seen an FTC with a day rate.

    I'd investigate a bit more. You sure they didn't mean PAYE?
    'CUK forum personality of 2011 - Winner - Yes really!!!!

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