Who Needs an Umbrella Company?
Contractors whose work falls within IR35 criteria can either set themselves up as a Ltd company or use an umbrella company. If, however, you are a contractor who is working for a single company on a long term contract that requires you to do regular hours you may not have a contract that falls under the IR35 criteria. If you are unsure it is wise to speak to 1 or 2 umbrella companies to double check your status and whether you can benefit from their service.
What to Look For In an Umbrella Company
You need to find an umbrella company that is well-established and has a good customer base. If you know other contractors talk to them about who they use.
You need a company that is open and honest about their fees and who follows the rules. A company that bends the rules is not for you after all it is the taxman’s rules that are being bent.
The best firms have a fixed fee structure. The work involved is the same for a contractor who is paid £100 a day as for one who is paid £1,000 a day, so they should charge both contractors the same, not a percentage.
False Promises a Dodgy Umbrella Company May Make
Some umbrella companies try to woo contractors by offering what turns out to be undeliverable extras. Be wary of an umbrella company that is offering something that is too good to be true, or greatly better than others have offered you.
For example, expenses. Some companies claim to be able to let you claim for expenses that the taxman does not normally allow. They claim to have special dispensation. Stay clear of any company that says this, the taxman does not bend the rules for anyone including umbrella companies.
PAYE is the only way to legally pay tax under an umbrella company. Do not use those companies who try to offer you PAYE tax dodges such as calling your pay a dividend, loan or something else. The taxman is wise to these dodges and will catch up with you.
PlanIT Solutions provides a sound in house Umbrella companythat is fully compliant and legal. They already have over 15,000 contractors using their service.
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