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An umbrella list

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    An umbrella list

    I've just graduated and have been offered a contract job with a leading company in their sector. I've never contracted before and am currently reading the advice on this forum. I don't intend contracting in the future as I'd rather have employment status or be fully freelance. Given my field, employment is the most likely direction. The recruitment agency in question have an approved list of umbrella companies and won't expand it (I've asked, specifically about Contractor Umbrella) as they say they have a month long process to work through including site visits etc. Their approved list of umbrella companies is:

    Parasol
    Orange Genie
    Eden
    Liberty Bishop
    Giant

    I know it's easy for there to be negative reviews about any company in any space. It's hard to get a picture at this stage other than to say I've seen a lot of bad experiences about Parasol and a few about Orange Genie and Giant. What i'd like to get a picture of is which are the most reliable of these companies. Does anyone have any perspective on that? The most reliable and trustworthy option is what I'm looking for really.

    Technically, I know that a limited company is a better long term option. However, given that I doubt I'll be pursuing a contract based career, I doubt that this direction is good for me. Having to bear all the year one costs of setting up a limited company only to wind it up again later, most likely, is unappealing and research so far suggests I'd be worse off.

    If anyone has any thoughts on the companies above, which one's the most reliable and trustworthy, then I'd appreciate it. Thanks!

    #2
    Originally posted by CSrocket View Post
    The recruitment agency in question have an approved list of umbrella companies and won't expand it (I've asked, specifically about Contractor Umbrella) as they say they have a month long process to work through including site visits etc.
    If you let me know who the agency are I may be able to see if I can help.

    Comment


      #3
      Originally posted by lucycontractorumbrella View Post
      If you let me know who the agency are I may be able to see if I can help.
      Thanks, sent you a PM.

      Comment


        #4
        Originally posted by CSrocket View Post
        Their approved list of umbrella companies is:

        Parasol
        Orange Genie
        Eden
        Liberty Bishop
        Giant

        Technically, I know that a limited company is a better long term option. However, given that I doubt I'll be pursuing a contract based career, I doubt that this direction is good for me. Having to bear all the year one costs of setting up a limited company only to wind it up again later, most likely, is unappealing and research so far suggests I'd be worse off.
        Sorry, but I have no particular views on the list above, nor any alternatives. I suffegt however that you start by eliminating any that do not appear on the FCSA or Professional Passport lists.

        Why do you say that a limited company is a better long term option?

        The test of whether a job is within IR35 or not, is based on what you do, how you do it and why. This is sometimes shortened to direction, supervision and control issues.

        There is very little in the questions asked (if anything) that says using a limited company, helps in any significant way.

        I'm just interested in why you think it does?
        Best Forum Adviser & Forum Personality of the Year 2018.

        (No, me neither).

        Comment


          #5
          Originally posted by webberg View Post
          Sorry, but I have no particular views on the list above, nor any alternatives. I suffegt however that you start by eliminating any that do not appear on the FCSA or Professional Passport lists.

          Why do you say that a limited company is a better long term option?

          The test of whether a job is within IR35 or not, is based on what you do, how you do it and why. This is sometimes shortened to direction, supervision and control issues.

          There is very little in the questions asked (if anything) that says using a limited company, helps in any significant way.

          I'm just interested in why you think it does?
          Thanks. I'll certainly check the lists you mention as well as other sources

          My word choice may not have been precise enough which may reflect that I've never contracted before. I was offered the job last Thursday morning and immediately asked whether I wanted to use an umbrella or be paid through a limited company, so I'm racing to catch-up.

          What I was trying to convey is that I understand that, in the correct circumstances, limited companies provide certain advantages eg in tax that can be beneficial especially over the longer term. Given that I view contracting as a one-off to help get a career in a new field started, it may not be the best option for me even if it is technically possible and appropriate.

          Comment


            #6
            Originally posted by CSrocket View Post
            Thanks. I'll certainly check the lists you mention as well as other sources

            My word choice may not have been precise enough which may reflect that I've never contracted before. I was offered the job last Thursday morning and immediately asked whether I wanted to use an umbrella or be paid through a limited company, so I'm racing to catch-up.

            What I was trying to convey is that I understand that, in the correct circumstances, limited companies provide certain advantages eg in tax that can be beneficial especially over the longer term. Given that I view contracting as a one-off to help get a career in a new field started, it may not be the best option for me even if it is technically possible and appropriate.
            Thanks.

            In general, depending on day rate, being an employee will net you around 65% of your gross.

            An umbrella - if the day rate stays the same - will be slightly less as they charge a fee.

            In many instances an umbrella might get you a higher day rate so you gain a little.

            Money paid to your company will be net of fees. You need to ask how much they will be.

            Once the company has money, you can pay yourself a combination of salary and dividends. This might bring the rate up a little to perhaps low 70%.

            Many outfits will quote you 80% or more. Avoid them. They are using some form of tax planning which they will assure you is "compliant" or "HMRC approved" or in some other way the next best thing to magic beans.

            The key question however is "will the role be inside or outside IR35?".

            If it is inside, then deductions similar to and calculated in the same way as full PAYE will be due from one of the entities in the chain, most likely, your company.

            If it is outside IR35, then the rates above will probably be available.

            Get the role assessed for IR35 first, preferably from a firm prepared to guarantee that they will defend you in the event of a challenge. Plenty of them advertise here.
            Best Forum Adviser & Forum Personality of the Year 2018.

            (No, me neither).

            Comment


              #7
              Originally posted by webberg View Post
              Thanks.

              In general, depending on day rate, being an employee will net you around 65% of your gross.

              An umbrella - if the day rate stays the same - will be slightly less as they charge a fee.

              In many instances an umbrella might get you a higher day rate so you gain a little.

              Money paid to your company will be net of fees. You need to ask how much they will be.

              Once the company has money, you can pay yourself a combination of salary and dividends. This might bring the rate up a little to perhaps low 70%.

              Many outfits will quote you 80% or more. Avoid them. They are using some form of tax planning which they will assure you is "compliant" or "HMRC approved" or in some other way the next best thing to magic beans.

              The key question however is "will the role be inside or outside IR35?".

              If it is inside, then deductions similar to and calculated in the same way as full PAYE will be due from one of the entities in the chain, most likely, your company.

              If it is outside IR35, then the rates above will probably be available.

              Get the role assessed for IR35 first, preferably from a firm prepared to guarantee that they will defend you in the event of a challenge. Plenty of them advertise here.
              Thanks for the suggestions and your thoughts. I'll definitely be avoiding that 80%+ crowd!

              I researched costs of running a limited company including the year one set-up costs, securing quotes, so I have a reasonable picture of that.

              I'll research IR35 criteria more today but I'm already pretty sure that it will be inside IR35: I'll be on-site, keeping regular hours, required to perform specific, limited tasks in-line with company governance and standards which exist to ensure the quality of the work. I might also need to provide training to new system users in order to ensure that they can use the system properly in-line with governance and those will include permanent employees.

              Thanks for your thoughts, it's very helpful in putting the pieces together.

              Comment


                #8
                You should perhaps also be asking why the company is taking on a contractor instead of a permie, given the role you are describing. Are they looking for a way to drop you pain free (for them at least) after a few weeks if it doesn't pan out? Are they saving lots of money - for example NICs at 13.8% of gross - by pretending you are not an employee? Are they going to offer you a permanent role if you turn out well?

                FWIW go umbrella. Although you don't need to spend lots to get a company set up since the DIY version can be done online through Companies House for peanuts, and plenty of accountants will offer company setup as part of the deal, it is not worth doing until you know where your career is going.
                Blog? What blog...?

                Comment


                  #9
                  Originally posted by malvolio View Post
                  You should perhaps also be asking why the company is taking on a contractor instead of a permie, given the role you are describing. Are they looking for a way to drop you pain free (for them at least) after a few weeks if it doesn't pan out? Are they saving lots of money - for example NICs at 13.8% of gross - by pretending you are not an employee? Are they going to offer you a permanent role if you turn out well?

                  FWIW go umbrella. Although you don't need to spend lots to get a company set up since the DIY version can be done online through Companies House for peanuts, and plenty of accountants will offer company setup as part of the deal, it is not worth doing until you know where your career is going.
                  Thanks for your thoughts.

                  The job is related to a system migration, so once that process has been completed, I may be surplus to requirements. There may also be a certain degree of it being easier to drop someone who doesn't work out. There's a possibility it could be extended by a few months or that I could be hired full time at the end of the contract. Beyond my own performance, I think the test is going to be to what extent they believe they can use the new system without specialists. Either that or they want to see whether, once the heavy lifting is done and things just need to be kept ticking over, they can fold my job role into that of a permanent employee.

                  All I can do is do my best work and see where it takes me. If it's a permanent job, then great, subject to contract. If it's 6 months and done, then I'll have earned a living for half the year, got some vital experience in my new field, and secured a good employer name and reference for my CV.

                  I agree about the umbrella approach. A limited company doesn't seem to make sense given my position and preferences at the moment.

                  Thanks for pitching in!

                  Comment


                    #10
                    Sounds ot me that the end user wants a temporary employee rather than a contractor.
                    Best Forum Adviser & Forum Personality of the Year 2018.

                    (No, me neither).

                    Comment

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