The simple and effective solution to increasing your take home pay
The perfect solution for setting up and running your own company
This information is designed to give contractors a fair & even handed overview of the different ways of trading through, and achieving, limited company status.
Each contractor's personal circumstances are different and you should consider what's important to you and your particular situation.
An umbrella company becomes your limited company, through which you trade as a contractor. The contractor becomes an employee of the umbrella company.
An umbrella company is a ready-made ready-to-go limited company that can be used as and when required. There are no setup costs, no joining or leaving costs and only charge when you are actually working.
You send your timesheet to the umbrella company who then invoice your recruitment agency based on the hours worked x rate. As soon as your umbrella company is paid, they will pay you. Payment is always made having calculated your PAYE tax deductions, so you will be paid a net salary.
You will have no further responsibilities or obligations; your umbrella company takes care of all the
You can reduce your tax bill by claiming certain business expenses such as travelling costs and subsistence expenses.
Typically, working through an umbrella company you will take home around 70% of your gross income. Average industry cost around £50 per month.
You will have to setup a limited company, open a business bank account and get insurance cover. Your accountant will help you with all of this administration.
As a director you will control invoicing, the company bank account and decides on how much to pay yourself. Your payment comprises two elements; salary & dividends.
A limited company will have a contract with a recruitment agency or the end-client. Working through the limited company you can claim tax free expenses, such as:
Typically, working through your own limited company you will take home around 80% of your gross income. Average industry cost around £120 per month.
If you are not sure which option is the best one for you, why not speak to one of our friendly advisors? All of our staff are fully trained professionals who can give you impartial advice based on your unique situation.
We work with thousands of contractors from across a wide range of industries and would be delighted to welcome you as a client.