What is the main benefit of an umbrella company
I've had little to do with umbrella companies but a family member has been offered a year's interim post at a large organisation and can either run via the agency as an employee or arrange an umbrella company (UC) appointment.
From my quick reading the UC employs him and, because the arrangement falls under IR35, uses any expenses he wants to claim and their own admin fee to reduce the deemed salary upon which he suffers PAYE. Under the agency employment route I guess he'll be paid as normal but could claim the same expenses on his tax return to gain the tax relief.
So, simplistically, in addition to what appears a large % to the agency (compared to the UC fee) and the NI saving from the reduced salary under the UC, he appears to be far better off with the UC arrangement.
I haven't worked out the holiday pay difference yet as I can't quite follow what happens under the UC but from what I read the hourly rate he gets from the UC during his working weeks includes holiday pay, whereas the agency pay him throughout the entire year at work or on holiday.
I might have got the wrong end of several sticks here but any pointers would be appreciated.
- HP agreement in Directors name but payments under company 698 19
- Another Sneaky Tax Hike! 783 8
- Personal Pension Relief in the Tax Code 333 5
- Paying Son 766 19
- CGT on lost shares/scam 397 5
- Sage Instant Accounts Complete De-install problem 279 10
- Love is in the air 635 7
- Auto enrolment confusion 2,061 47
- Setting up a practice 578 5
- Very large share capital by mistake 568 7
- VAT refund if only output tax on first claim 514 4
- 24 month rule and expenses 437 1
- Stamp Duty 307 4
- Physiotherapist and vat and agency work ( one for Les Howard???) 243 4
- I am 34 years old, am I too old to start a career in Accounting ? which is the best way to pursue it 1,835 21
- Incorporation of gp practise 418 1
- Client Paperwork Retention? 597 13
- Paid staff their normal salary instead of SMP 593 7
- Tax Overlap Reporting 426 4
- Pay rise - how to enter in Moneysoft 404 9
- DTA tie-breaker issue 306
- Tax Implicatins on a Directors Loan 296
- CGT for NOn UK residents 282
- Foreign domicile status 281
- Employer's pension contribution - need to be PAYE registered? 281
- What are the tax implications of overseas sales through a UK based company? 258
- Apprenticeship Levy 244
- profit or loss on furnishings and deed of trust 243
- Discretionary payment to sick employee 231
- Tenants in Common - Actual % split not written down 227