Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

Caro Laithwaite VN — Wed, 16 Mar 2016 19:53:46 GMT

OHHH BOY this is a very nasty misleading post. DO NOT GO VIA SOPHIE I run a LTD company and am very angry at her advice it is VERY MISLEADING go to an ACCOUNTANT preferably a CHARTED ACCOUNTANT and they HAVE FREE SURGERIES to discuss your needs just do a local search.

RE: Becoming Limited company instead of umbrella

Louise B — Wed, 16 Mar 2016 18:34:28 GMT

[quote user="Clawedjird"]

Thank you, that is really useful :)

[/quote]

You are welcome. Obviously, because it will be a second job, you will get taxed on the whole amount at 20% (assuming you are a basic rate tax payer which most VNs are), but, if you have overpaid tax (you won't if you earn more than the personal allowance in your main job) you can claim it back from Inland Revenue at the end of the year.

Remember that you can reduce your tax bill by claiming back CPD (cost of course, travel, food, accom) and professional fees (RCVS, BVNA, BSAVA) even if you are working on a PAYE basis so it is possible to still reduce your tax bill further. This will require you to register for self - assessment though and complete a tax return at the end of the year. This is easy to do though.

RE: Becoming Limited company instead of umbrella

Clawedjird — Wed, 16 Mar 2016 18:28:15 GMT

Thank you, that is really useful :)

RE: Becoming Limited company instead of umbrella

Louise B — Wed, 16 Mar 2016 18:24:43 GMT

[quote user="Clawedjird"]

What would your recommendation be for people who sporadicly locum?

[/quote]

I would recommend you ask the vet practice if they will take you on PAYE, If you are only doing odd shifts, the financial implications for them are minimal. If you stay under the national insurance threshold (circa £156 per week, but most pay monthly so if you only do a week's locum a month you will stay below it easily) they will not have to pay the employer's contribution and if you don't earn 10k+ a year working for them, there is no pension contribution. Ask for your locum hourly rate to be paid with the holiday pay rolled into this and then the employer won't fall foul of this either.

RE: Becoming Limited company instead of umbrella

Louise B — Wed, 16 Mar 2016 18:21:33 GMT

LOL. We overlapped with me editing my post, Claire. I was more irritated by a throwaway remark like "umbrella companies ceasing to exist in 2016" which there doesn't seem to be any evidence for (unless something in the budget today that I haven't seen yet!).

RE: Becoming Limited company instead of umbrella

Claire Coulthard RVN — Wed, 16 Mar 2016 18:17:30 GMT

"changes to UK legislation around expenses and proving employment status is set to alter the way umbrella companies and contractors work together from April 2016.

In a nutshell, Umbrella companies support contracted workers by taking care of all the administration that comes with payroll, PAYE and taxes, invoicing and getting clients to pay; even insurance cover for contractors in the work place. An umbrella company takes care of all this and removes the stress that comes with it. This is so that the contractor can concentrate on what they do best which is their day job. Perhaps more importantly, contractors who work with umbrella companies are able to take advantage of tax deduction/ efficiencies around expenses. This ultimately means more money in their bank account. However, this is where the new legislation to be announced in April 2016 is likely to hit contractors and umbrella companies in the pocket.

How will it affect umbrella companies?

Umbrella Companies have provided contractors a contract of service, and all of the back office administration including: invoicing, PAYE and NI deductions, collection of monies from recruiters and hirers for their services; and providing insurances for contractors in connection with their trade or occupation. This allows the contractors to concentrate on what they do best, which is their day job. One of the major advantages for the contractor using this model of employment, was the dispensation umbrella companies were allowed by HMRC. This dispensation included tax relief on travel expenses and subsistence, which helps reduced the individuals tax bill and put more money into the contractor’s bank account. From April 2016, the dispensation will be removed where the contractor is under the Direction, Supervision or Control of the hirer. Equally, this includes areas where the hirer has the right to Direct, Supervise or Control the contractor.

It’s not all doom and gloom, the changes could mark a turning point for umbrella companies who add value in many other areas but are often not given the credit they are due. Covering customers against potential tax investigations for if they do their accounts incorrectly, providing insurance cover where employers require it and offering general expertise and efficiencies on everything an HR department would usually do, are all in one place under one roof for one monthly or weekly cost.

It is not the end of the road for umbrella companies, as many contractors will still value the services offered including the legal support; invoicing, payroll, tax deductions and the insurance cover provided by the umbrella company for the workers activities. However, umbrella companies will be looking to improve their range of products and services to contractors and recruiters in the early part of 2016, ahead of the new tax year.

How do the changes affect contractors?

On the other hand, with the monthly cost for contractors to use an umbrella company starting from approximately £70 per month, some might argue, is it still worth the money? Others may feel the latest changes are enough to make them want to turn to permanent work; or set up their own Limited Company, where the contractor is earning a sufficiently high hourly rate. With many sectors relying on the flexibility and perks of contract positions and with only a short term need, going permanent might not be an option if the vacancies aren’t there. Why not just do it yourself? Well, if you are working long hours during the week you might not have time, it’s also the know-how and industry knowledge which all comes as part of the package. The other big thing HMRC will be concentrating on is whether a contractor is genuinely self-employed or not. No contractor wants to be investigated because they are not being deemed as self-employed and then to be hit with a substantial tax bill or lawsuit.

Below is an outline of the key criteria set out by the UK Government, which must be satisfied before the provisions of the agency legislation can apply and you are deemed as self-employed. All three of these have to exist before expenses are excluded and only one needs to exist to prove a person is not self-employed.

Supervision, Direction or Control (SDC)¹

Supervision is someone overseeing a person doing work, to ensure that person is doing the work they are required to do and it is being done correctly to the required standard. Supervision can also involve helping the person where appropriate in order to develop their skills and knowledge.

Direction is someone making a person do his/her work in a certain way by providing them with instructions, guidance or advice as to how the work must be done. Someone providing direction will often coordinate how the work is done, as it is being undertaken.

Control is someone dictating what work a person does and how they go about doing that work. Control also includes someone having the power to move the person from one job to another.

Our advice at Jelf is for contractors to be aware of the changes, ask the right questions and consult your umbrella company. Umbrella companies may themselves also look to take on tax investigation cover during this time as the new legislation throws up uncertainty around new rules and regulations.

¹ Gov.uk – Definition of Supervision, Direction or Control with supporting examples

RE: Becoming Limited company instead of umbrella

Louise B — Wed, 16 Mar 2016 18:08:58 GMT

[quote user="Sophie Millar"]

Umbrella companies will cease to exist come April guys

[/quote]

Really???

My understanding is that the rules surrounding expenses claims through umbrella companies are changing from April 2016. Umbrella companies will continue to exist, it is just people using an umbrella company that fall foul of the Supervision, Direction and Control ruling (which effectively applies to all VNs who have to work under the direction of a vet) can no longer get tax relief on business expenses like commuting to the workplace, accommodation if staying away from home, lunch/dinner/overnight meals if away from home UNLESS those expenses are incurred through going to a temporary workplace (temporary in as much as your locum assignment is normally at branch A but half way through the day they as you to go to branch B to help out, etc).

This does have serious financial implications for locum VNs though - and I am not convinced that this improves through going into a limited company as VNs would appear to probably fall foul of the IR35 ruling which makes it difficult to hold back lots of earnings to pay yourself as a dividend. I know people do but it is only a matter of time before there is a test case.

RE: Becoming Limited company instead of umbrella

Claire Coulthard RVN — Wed, 16 Mar 2016 18:05:35 GMT

so what happens then to those of us that don't earn enough to warrant becoming limited?

RE: Becoming Limited company instead of umbrella

Sophie Millar — Wed, 16 Mar 2016 14:36:17 GMT

Umbrella companies will cease to exist come April guys

RE: Becoming Limited company instead of umbrella

Fiona McMahon — Tue, 15 Mar 2016 21:03:01 GMT

With the changes to expenses from April can it still be a good idea to use an umbrella company?

RE: Becoming Limited company instead of umbrella

jasmine curtis — Fri, 04 Mar 2016 08:57:58 GMT

Its jasmine_cullen@yahoo.co.uk

Thank you :)

RE: Becoming Limited company instead of umbrella

Sophie Millar — Fri, 04 Mar 2016 08:56:08 GMT

Yeah sure what's your email?

RE: Becoming Limited company instead of umbrella

jasmine curtis — Thu, 03 Mar 2016 21:45:39 GMT

I know this is an old thread but can you recommend any umbrella companies?

RE: Becoming Limited company instead of umbrella

Sophie Millar — Mon, 26 Oct 2015 08:40:45 GMT

As I've said before, the umbrella company I work with are great and I have hardly any problems, when I do it is sorted imminently. I called them last week to say one of my nurses had been underpaid and they transferred the difference to them within 1 hour.

RE: Becoming Limited company instead of umbrella

Rachel Woodcock — Fri, 23 Oct 2015 22:40:41 GMT

Chose your umbrella company wisely though as there are some rubbish ones out there who make you have to fight for your money!

RE: Becoming Limited company instead of umbrella

Sophie Millar — Fri, 23 Oct 2015 09:17:39 GMT

I would recommend an umbrella company for this :)

RE: Becoming Limited company instead of umbrella

Clawedjird — Thu, 22 Oct 2015 19:30:08 GMT

What would your recommendation be for people who sporadicly locum?

RE: Becoming Limited company instead of umbrella

Sophie Millar — Tue, 06 Oct 2015 14:22:11 GMT

Hi RVNs I have received quite a lot of messages regarding this post, I just want to stress that unless you are consistently working as a locum - earning around £550 per week - then being a limited company does not really benefit you. If you do earn this much, you will save substantial amounts by being a limited company over using an umbrella company.

So this said I am still here to advise you but best to stay umbrella if you are earning less than £550p/w :):):)

RE: Becoming Limited company instead of umbrella

nursek8 — Sun, 27 Sep 2015 14:25:19 GMT

That is very kind of you Sophie! I am going to start locuming around dec/jan time and really could use some help with deciding if i should go with an umbrella company or as a limited company or self employed. Lots of info out there but confusing and i want to make sure i do the right things. Any help you could offer would be fab.

Katejones19@yahoo.co.uk

Thanks again

Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

copied from a contractor website...

Umbrella companies to go the extra mile from April 2016

How will it affect umbrella companies?

How do the changes affect contractors?

Supervision, Direction or Control (SDC)¹

Peter Stoll

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella

RE: Becoming Limited company instead of umbrella