HOW TO MAKE USE OF CONTRACTORS
In the umbrella company there will the company behind you to do all the paperwork and the tedious one being filing the tax returns. Hence many contractors choose the PAYE umbrella company over the limited company option. The umbrella company will be finding jobs for you and it will pay for the social benefits as well. With a certain percentage of the income that you earn will go towards covering these expenses are deducted by the umbrella company. They are there to take care of the payroll and get to work on a series of assignments that you would not alone have time to find.
Why it is useful
If you are free lancer or a contractor, joining with an umbrella company would be a good option for you. There are PAYE calculators that help you know your net pay on weekly or monthly basis. There is a margin that the umbrella company keeps for itself and this would change the calculation of much you would take home. If you end up taking a very good percentage home, there is more than what meets the eye. The agency or the umbrella company would have figured out a way to hoodwink the tax liability. There are different ways used and in the end the nobody ever pays the tax. The employee trust benefits were used as good shield in the non-payment of taxes. But the authorities got the wind of this and they imposed penalties and fines along with interest that was pending due defaulting.
If you are paying your taxes efficiently and taking home your salary under the umbrella company, you will not be earning more as the umbrella company would take its percentage, so you should not be under the illusion that you would earn more than a limited company. The payment is regular based on the agency that hires your umbrella company workers if they are on time on their paying schedules then you be paid on time as you submit your timesheet. The processing is quick and efficient. But if you have to choose a right umbrella company who does the things in the right way and pays on time you would have to look around and check out before just jumping the bandwagon of recruiters. They will have to be reputable and follow the code of conduct.
The recruitment agency will offer the contractors two different rates for payment
- PAYE( if you work as an employee for the agency)
- If you get paid by the umbrella company which will be a higher rate.
- And also, a higher rate if you have your own limited company.