Post
by skilachi » Tue Jun 19, 2007 2:54 pm
Hello All,
I've been contracting for the past 4yrs....IT field and find using Umbrella companies easy and safe to use. Cos all you do is fill out ur expenses for the month and that expenses is taken (tax free) from the total pay.
E.g if you earn £2000 a month contracting and say ur expenses for that month is £1000, which will be taken out (tax free) of the £2000 u earned for the month, so you are left with say £1000 meaning the amount to be taxed is £1000 and not £2000 as ur expenses are tax free. So by the time the umbrella company calculates there own admin fees (eg £100 or less) the remaining £900 will now be subject to tax, which will be like £200 (tax, NI), so u will have another £700 as salary.
So now ur total take home pay will be £1000 (ur tax free expenses) + £700, which will be £1,700 for the month.
But you u have ur own limited company, you'll be doing ur own tax, payin an accounts to do it for you, need a company accts etc....too much stress but in the case of umbrella companies, they will do all ur tax for u so no need to worry, all u need to know is ur money is in ur personal acct monthly.
Although i'm sure u can save more money if u use ur own limited company as i have some friends were using umbrella when they 1st started contracting and now have got their own limited company and some are still using umbrella companies, its juts a long thing, cos at the end of the year, you will need to fill in ur own tax an dif u are late or dont fill it in-time, u 'll be fined and also there is a new legislation u might wanna know if u want to use ur limited company........MSC (Managed Services Company) companies are banned (google up on it).
If you want the umbrella company i'm using, can refer u as i've been with them for 4yrs and i get my money in time as long as you sign ur timesheets and send it to ur agency to pay the umbrella company.
If its ur 1st contracting role, wud advise u use an umbrella company at first, then if you are not comfortable with them, then go for ur own limited company.