Finest Tips for using an umbrella company

Contractors can discover an umbrella company is a solution for managing customers and their money. They can ensure you’re not breaking regulations andgive you the protection of becoming an employee without the hassle of setting up a limited company. If you’re considering using an umbrella company,you should make certain you do things and know how to get the most from using the company. There are a few things to consider if you want to get the advantage of an umbrella company.

Make Sure an Umbrella Company Is

Before using an umbrella company,you should make certain that it’s the right choice for you. It’s not suitable for all contractors,which means you need to evaluate the advantages and disadvantages of using one. An umbrella company permits you to avoid the need to set up your own company. The umbrella company will raise invoices for you and cover you through PAYE, as you pay them a fee. It helps you to avoid problems around IR35 and simplifies things like accounting and taxes for you. You may also pay into a retirement and receive insurance through an umbrella company.

Know the Law Surrounding Umbrella Companies

If you are going to use an umbrella company,it’s a good idea. An umbrella company needs to pay their contractors the national minimum wage. They can’t cover below that and then make up the difference with expenses. Umbrella companies offer the protections that an employer does,and you should have a complete employment contract together. You get the benefits of holiday pay,statutory sick pay and protections that you wouldn’t have as a plain contractor or self-employed individual.

Claiming Expenses with an Umbrella Company

Expenses can get a little complicated when you use an umbrella company. You can have expenses paid to you by the company free of income tax and National Insurance contributions,but they need to be repayment of actual expenditure which you have incurred while performing your job. Travel expenses to and from your workplace aren’t included because this is viewed as commuting,as a fulltime employee would do. HMRC determined that under Supervision,Control or Management,contractors can’t claim tax relief on travel and subsistence.

Umbrella Companies and Holiday Pay

As you’re treated like an employee by the umbrella company,you’re entitled to holiday pay. Typically,it will be worked out at 12.07% of your hourly rate. Your holiday pay will be held by umbrella companies until you take off time,you finish a contract of employment or the tax year ends. Sometimes you might receive holiday pay month or each week.

Paying Tax with Umbrella Companies

You are taxed through PAYE when you use an umbrella company. They’ll send you a P60 at the end of the year and can do some tax tasks for you also. When you choose a company,check what is included in their charges.

If you want to use an umbrella company,ensure you understand how everything works. It could be a good option for you as a contractor.

-