Umbrella vs Limited

Google reviews
May 11, 2015

Umbrella vs Limited

Whether to operate through a limited company or an umbrella company is one of the most important decisions a contractor must make.

Two main factors to think about when making this decision are Time and Money.

Money – In short operating through a limited company will return the highest take home pay percentage. Using an experienced contractor accountant’s tax planning you will be able to save both National insurance and PAYE by operating through a limited company. If operating through umbrella companies you are effectively paid like an employee of the umbrella company and will be paid a salary after both NI and PAYE have been deducted (although you will be able to offset some expenses incurred).

Time – Operating through an umbrella company results in little or no paperwork and you will have no company accounts to keep in order! With becoming the director of a limited company comes legal obligations and responsibilities (increased workload). It is your responsibility to ensure both the company’s and your personal tax affairs are in order, this involves submission of company accounts, VAT returns and personal self-assessment return. Appointing an accountant can help reduce the workload significantly.

Although these are the two main factors, there are also other factors to consider when making your decision such as; Length of your contract, IR35 status, Job security and benefits.

We strongly recommend that you seek professional advice to help with your decision whether to operate through a limited company or umbrella company. Ensuring you have made the right decision could help you make significant savings.

Who to speak to?

Thinking of starting up contracting?

Already operating through an umbrella company?

If you are interested in hearing what way is best for you or how to switch to limited please do not hesitate to contact us.

0161 669 4221

Limited or Umbrella


Recent Articles

650,000 extra pensioners pay tax for the first time this month

650,000 extra pensioners pay tax for the first time this month

Around 650,000 pensioners are facing the prospect of paying tax on their pensions for the first time from this month thanks to a big boost to the State Pension from April 6, and frozen tax bands that will drag them into the tax net, according to calculations from...

The end of the P11D is expected in 2026

The end of the P11D is expected in 2026

The P11D form which has been used to process ‘benefits-in-kind’ such as loans for season tickets and company cars will no longer be used after April 2026, as HMRC will ask businesses to deal with all these benefits through the payroll instead. HMRC announced earlier...

Cryptocurrency gains must be reported on self-assessments

Cryptocurrency gains must be reported on self-assessments

If you hold or invest in cryptocurrency, or even if your employer pays you in a cryptocurrency such as Bitcoin, you may need to declare this on your self-assessment form. For anyone who didn’t in the 2022/23 form which should have been filed before January 31, it...

Ready to join us?

Whether you’re a contractor, freelancer, or small business, Bright Ideas can help remove the burden of time-consuming and complex finances. We’ll draw on our years of knowledge and experience earned helping sole traders just like you.

When you choose us, you’ll be assigned a dedicated Account Manager who’ll provide one-on-one support that’s customised to your business. Communication is key, so we’ll always answer your questions or requests as soon as we can. In fact, we offer a same-day response guarantee for emails and calls received before 3pm.

Contact us to get started

Give us a call us or send an email today!

Looking to switch accountants?
We make the transition simple.

Does your current accountant give 1-to-1 support? Are they fast and thorough?
Slap-dash services hold businesses back, so try our experts instead.

Move to an accountancy service that goes the extra mile…

Start the conversation

Let’s make your finances Brighter

Call us Monday to Friday 9am - 5pm

0161 669 4221

Request a call back