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.
- Can I claim mileage? 200 4
- Money laundering POCA 280 5
- Income recognition - release of product from a factory 125 7
- payroll software 208 3
- Mexican student in UK 162 4
- CIMA accountant wants to start consultancy 191 2
- Ownership of land - declaration of trust 47 2
- Finally a winner from HMRC!!! 241 2
- Annual Management Charge Rebates and Self Assessment Tax Return 173 1
- Ir35 test 86 1
- Partnership registered in error. No activities with view to profit. 142 2
- QuickBooks, Xero, FreeAgent and ClearBooks 881 19
- Dividend in specie 268 8
- Partnership Tax Return Deadline 106 1
- VAT on imports and the Flat Rate Scheme for VAT 196 9
- client threatening legal action 1,874 28
- Twenty signs your practice is bad at tax 730 8
- Partially exempt? 263 9
- Reclaiming EU VAT on fuel and expenses 106 1
- First VAT Visit for client 303 4
- Skandia using wrong address 499
- FHL, period of grace and Entrepreneur's relief 283
- Does anyone use PS Financials accounting software out there? 281
- Employee rewards 261
- Legislation access for part-time sole practitioner? 234
- Rental Property W&T And Equipment 226
- Gift of reversion and lease into trust by two different people - later PPR 224
- EPS Analysis - Change to EURO 216
- Etax Australian 175
- limited company for IR35 128