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.
- Cash injection by shareholder 93 3
- Treatment of goodwill in Consolidation 264 8
- PRR 226 12
- Do I need a 13digit tax ref for a ct600 195 4
- Now Scotland has voted "No", when does England get to vote? 1,095 55
- Is it more beneficial to be a Ltd company? 155 3
- Any Scottish members out there? 11,464 424
- How to pursue fraudulent trading 288 4
- corp tax software 346 7
- Pension Contributions Relief 439 14
- Is there an expert in Excel out there? 464 7
- Which tax box 185 2
- How to change reconciliation status of bank account in Sage 50 114 3
- how to start a career in accounting at 34? 234 3
- Underpaid Tax Options on SE 207 6
- References for clients 201 2
- Sole Trader - Working from home claims 147 2
- incorrect PAYE statements 120 2
- What accounting software packages are best for restaurants? 316 7
- Capital Gains Tax on title transfer 145 5
- Raiders of the Lost Tax File 1,297
- Chartered Accountant in County Down N.Ireland 462
- National Insurance 360
- Non Resident 278
- Franchise income and costs 255
- Hands on experience of Digita 209
- Best way to take money from a business if you have unlimited EIS allowances? 168
- Employer's Helpline 158
- employment capital allowances 150
- CIS paid under reg 9 140