RE: Locum work: Umbrella vs. Ltd Company

r-more — Tue, 01 Jan 2019 19:11:14 GMT

Hello, Happy New Year!

in terms of umbrella vs. limited, the only way to know for sure is to have a look at some hypothetical numbers. In general however, you’ll need to consider the operation of each.

An umbrella company will basically be your employer. They will deduct personal tax and national insurance and they will also pay employers national insurance, which will also come out of your earnings (in a normal employment situation the employer would pay this in addition to what they pay you).

For a limited company, the normal way to earn money is through dividends - basically a share of the company’s post tax profits payable to shareholders (which would normally be just you in these instances). However, most people who work via a limited company also usually take a basic salary up to the threshold for tax/national insurance. Dividends can be taken at any time, providing there are sufficient profits. You will pay personal tax on dividends (although at lower rates than a salary) but no national insurance and the limited company will also need to pay corporation tax. A limited company needs to file annual accounts (in addition to some other paperwork), complete a corporation tax return and a personal tax return (to cover you dividends). Although you don’t officially need an accountant for this, you will need to engage one if you don’t know enough about company accounts and/or tax, it’s not something that can be just picked up. In addition, setting up a limited company requires certain measures, again an accountant (or company secretarial service) can manage this

I would imagine your accounting needs will be relatively straightforward, online accounting means you can find a suitable accountant regardless of location. However, some people like to be able to see and deal with their accountant face to face.

I hope the above helps, please feel free to ask more.