Any IT contractors on here use an umbrella company?? benefits?
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Any IT contractors on here use an umbrella company?? benefits?
Im possibly starting a new temp contract soon, and wondering if its worth getting paid through an unbrella company?
What exactly are the advantages of doing so? I'll be paying higher rate tax.
Can things like mileage expenses, hotels be claimed back?
What exactly are the advantages of doing so? I'll be paying higher rate tax.
Can things like mileage expenses, hotels be claimed back?
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Originally Posted by Petem95
Im possibly starting a new temp contract soon, and wondering if its worth getting paid through an unbrella company?
What exactly are the advantages of doing so? I'll be paying higher rate tax.
Can things like mileage expenses, hotels be claimed back?
i'm a IT contractor working through the umbrella company 'giant'
basically it works out your treated as being self employed so you end up paying ALOT less Ni and Tax as all expenses can be taken off before tax is calculated.
you get a susbtadence (sp) for each day which is £25 if your out of your house for more than either 10 or 12 hrs (cant remember) plus something like 35p a mile.
in a nutshell i've ended up being about £80 a week better off!! and thats after the umbrella company have taken their share!
DO IT,DO IT NOW!!!
oh and if you say i recomended you i get £75
Wez
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Don't go with GIANT.
I'm still paying a £70K tax bill because of their cockup!
It's a long story, but the bottom line is it was their fault and they knew it, but when i said "I shall sue...", they said, "try it, we have the best lawyers"
Prosperity4 is a better umbrella company IMHO, but they do steal 6% of your gross.
I'm still paying a £70K tax bill because of their cockup!
It's a long story, but the bottom line is it was their fault and they knew it, but when i said "I shall sue...", they said, "try it, we have the best lawyers"
Prosperity4 is a better umbrella company IMHO, but they do steal 6% of your gross.
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well up to you who you go with mate, gonna be horror stories with any company i imagine, got 5 work mates who've been with em for months without any probs.
parity are supposed to be quite good also.
parity are supposed to be quite good also.
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Originally Posted by Fosters
Prosperity4 is a better umbrella company IMHO, but they do steal 6% of your gross.
Thing is I will be getting paid mileage and hotel expenses from the company, so I assume I cant claim these back again through the umbrella company?
Also when you say you can claim back something against tax, does that mean you effectively pay that much less tax? ie claim back 500quid, and pay 500quid less tax?
cheers!
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all umbrella companies worth their weight will allow you to claim uncomplicated expenses to offset your tax burden, including prosperity4.
you will be able to claim, communication, travel, accomodation, computing/hardware, stationary, et cetera. as well as susistance for simply being away from home for 10hrs+ per day
this is how they now minimise the impact of IR35, legally.
you will be able to claim, communication, travel, accomodation, computing/hardware, stationary, et cetera. as well as susistance for simply being away from home for 10hrs+ per day
this is how they now minimise the impact of IR35, legally.
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Sounds well worth it then - only thing is can I claim back expensives which I have already been paid?
Ie if the company are paying me 30p/mile, can I then also claim back from the unbrella company?
Also can someone refresh my memory on the implications of IR35? Doesnt it mean you automatically pay a 35% tax or something when you contract?
Ie if the company are paying me 30p/mile, can I then also claim back from the unbrella company?
Also can someone refresh my memory on the implications of IR35? Doesnt it mean you automatically pay a 35% tax or something when you contract?
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i'm not sure i understand what you mean, but in the old days you could claim expenses involved in the setting up of your company.
believe it or not, the most helpful people i talked to during my 10 years of contracting were... the inland revenue. they will happily help you milk the system as long as it's allowed.
IR35 was brought in to capture the paye that one man contractors were evading by working through a limited company - historically the only way contractors could operate due to tax liabilities associated with limited companies.
it states you should pay paye on ALL your income where the contract with the client falls within IR35. BUT! you are allowed up to 5% expenses. So if you earn 100K and your valid expense is 1K, then you should be taxed as an employee on the remaining 99K. with a nice accountant, you can always find 5% expenses
the problem is that contractors get stiffed for Employees PAYE and Employers PAYE, which is to say that the Employers NI contribution for the employee is uncapped.
Broadly speaking, the only way contractors are better off than permies is that they earn 4 times as much. an effective 50% tax on 150K is still a better wage than a permie doing the same IT job
believe it or not, the most helpful people i talked to during my 10 years of contracting were... the inland revenue. they will happily help you milk the system as long as it's allowed.
IR35 was brought in to capture the paye that one man contractors were evading by working through a limited company - historically the only way contractors could operate due to tax liabilities associated with limited companies.
it states you should pay paye on ALL your income where the contract with the client falls within IR35. BUT! you are allowed up to 5% expenses. So if you earn 100K and your valid expense is 1K, then you should be taxed as an employee on the remaining 99K. with a nice accountant, you can always find 5% expenses
the problem is that contractors get stiffed for Employees PAYE and Employers PAYE, which is to say that the Employers NI contribution for the employee is uncapped.
Broadly speaking, the only way contractors are better off than permies is that they earn 4 times as much. an effective 50% tax on 150K is still a better wage than a permie doing the same IT job
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sorry it wasn't too clear, but i meant that limited companies have a limited liability, ie; if you defaulted on your tax payments, your client doesn't get stiffed for your tax bill.
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through a limited company, work on a 46 week year at 50% tax and you won't be too far wrong.
if through an umbrella company, add their % fee on top of the 50
the worst thing to do is think, oo oo [52 weeks] X [a week's pay] X [uhmm, 40% tax] =
it doesn't work like that! be realistic and plan properly.
the other plan is...
find an accountant who will operate you and ignore ir35. you'll pay 20% MCT and only a few quid income tax/NI for the year
close your company every 2 years and open a new one.
remember the IR can go back 7 years and for every discrepency they find, 7 years further back.
if through an umbrella company, add their % fee on top of the 50
the worst thing to do is think, oo oo [52 weeks] X [a week's pay] X [uhmm, 40% tax] =
it doesn't work like that! be realistic and plan properly.
the other plan is...
find an accountant who will operate you and ignore ir35. you'll pay 20% MCT and only a few quid income tax/NI for the year
close your company every 2 years and open a new one.
remember the IR can go back 7 years and for every discrepency they find, 7 years further back.
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