[Soul_Glo]

I have been thinking about getting back to Health Consultancy work again. Last did this 4 years ago.

Recently had an offer of a post and they asked whether I wanted to be limited or umbrella. Wondering how to earn the most.

Any thoughts appreciated.

[isleaiw1]

Originally Posted by 37psi

I have been thinking about getting back to Health Consultancy work again. Last did this 4 years ago.

Recently had an offer of a post and they asked whether I wanted to be limited or umbrella. Wondering how to earn the most.

Any thoughts appreciated.

Public sector or private?

You may have seen the dictat that public sector bodies have to determine if contractors fall within IR35 and not leave it to consultant?

That's likely to come to private sector soon - so if it was me I would not be thinking of how to earn most but how to best manage my risk.

So umbrella all the way for me...

[Ajs_435d]

Limited depending on money, simply ask them how much cut/overhead for umbrella.

If work around (not long term contracts) and contracts proves your not pseudo staff or have too travel go limited.

[Soul_Glo]

Originally Posted by isleaiw1

Public sector or private?

You may have seen the dictat that public sector bodies have to determine if contractors fall within IR35 and not leave it to consultant?

That's likely to come to private sector soon - so if it was me I would not be thinking of how to earn most but how to best manage my risk.

So umbrella all the way for me...

Private

[225]

limited company. If it's in ir35 then make sure they bump the rates up to compensate. Be mindful you can't claim any expenses with inside ir35.

There is quite a long thread on this somewhere.

Hopefully looks like the government have kicked the mess which is ir35 back a year to 2020 so bit of breathing space. However it's not all bleak as a lot of companies now ask for outputs and not people thus with a good contract fall outside ir35 even within public sector.

[Watsey]

Limited + accountant. Far more scope for better overall financial management.

[gr4z]

+1 on limited company with a good accountant and perhaps QDOS insurance for IR35.

[CT1]

Deff limited you can't do much under umbrella.

[dizzy619]

Didn't the umbrella corporation have a zombies problem?

[AlanQS]

If you are working for the public sector you are almost certain to be declared to be within IR35. The main reasons for this are that:
1) The HMRC on-line tool that employers can use, is biased towards declaring that a free-lancer is within IR35 since some people who have won court cases would be liable using this tool, even though they are not.
2) HMRC made it easy for employers by stating that it is up to the job agency or middle man to determine if you are IR35 liable and why should they take any risks, they will declare you within it and deduct tax and insurance at source, if you are a limited company, nor will they make any allowance for your tax free limit or deduction of genuine expenses so you lose a bucket load. Better, in that case to join an umbrella company than be limited in a public sector job.
The main problem with umbrella companies is national insurance. Employer national insurance has to be paid and the money for that comes out of your pocket before you see it. And you pay the full employee NI as well so 25.8% comes out of your pocket before you see your tax bill. Also, if you are reimbursed genuine expenses by the employer, unlike a PAYE or limited person, Employer's national insurance is applied to your expenses as well so that's a minimum of 15.8% coming off legitimate expenses.
SO, if private sector, go limited. If public sector, go umbrella and put your rates up, most others have and the employers know it.

[isleaiw1]

Originally Posted by AlanQS

Employer's national insurance is applied to your expenses as well so that's a minimum of 15.8% coming off legitimate expenses.
SO, if private sector, go limited. If public sector, go umbrella and put your rates up, most others have and the employers know it.

Why would Ers NI be deductible for any expenses that were wholly and necessarily incurred for business? That contravenes all of the rules on the subject...

[DonDP]

Originally Posted by dizzy619

Didn't the umbrella corporation have a zombies problem?

I see what you did there... They had evil residents too...

[AlanQS]

Originally Posted by isleaiw1

Why would Ers NI be deductible for any expenses that were wholly and necessarily incurred for business? That contravenes all of the rules on the subject...

Not really, it's another HMRC dig at the hated umbrella groups. When the employer, sorry, Client, pays you your wages and expenses, it's all one cheque or bank transfer and the Umbrella group people treat the entire amount as income. Employer's NI is (after the first £156 per week) deducted from the entire value of the payment including the expenses portion. You get the tax relief on your claimed expenses but they stick you with the N.I. - both yours and the employer.
Remember, the umbrella group processes are all computerised, it's not an accountant with a brain that's doing it and they don't know that part of the money just received was expenses and, I suspect they are not allowed to treat it any other way. I know because it happened to me several times and despite loud and vocal protest, nothing was done. To be fair, although you claim expenses all the time, they are usually self generated and it doesn't apply then, only when the client is reimbursing you for an expense.

[isleaiw1]

Originally Posted by AlanQS

Not really, it's another HMRC dig at the hated umbrella groups. When the employer, sorry, Client, pays you your wages and expenses, it's all one cheque or bank transfer and the Umbrella group people treat the entire amount as income. Employer's NI is (after the first £156 per week) deducted from the entire value of the payment including the expenses portion. You get the tax relief on your claimed expenses but they stick you with the N.I. - both yours and the employer.
Remember, the umbrella group processes are all computerised, it's not an accountant with a brain that's doing it and they don't know that part of the money just received was expenses and, I suspect they are not allowed to treat it any other way. I know because it happened to me several times and despite loud and vocal protest, nothing was done. To be fair, although you claim expenses all the time, they are usually self generated and it doesn't apply then, only when the client is reimbursing you for an expense.

I think you used the wrong umbrella company,..

[Beancounter_74]

Each circumstance is different, but Limited company will definitely give you more scope to maximise you're return from the business with an accountant who is on top of their game.

If you can get an intermediary 'body shop' in place between you and the organisation, that can help protect you too, but some companies won't want the extra cost.

Go and speak to a specialist firm about what work you intend to do, it will be worth it in the long run. Shouldn't cost you anything either for an hours chat to understand things.

[dizzy619]

Originally Posted by DonDP

I see what you did there... They had evil residents too...

Finally... I thought I was on my own for a minute

[gr4z]

When I started out as a contractor I went with an Umbrella. I was naive and didn't check everything. A few years later even when I had become a Ltd company, the nice people at HMRC wrote to me saying my Umbrella company had been investigated and I owed them over £7000. After speaking to my accountant, she recommended I just paid and accepted it, otherwise they will never ever leave you alone. I paid.

Just to be sure if you do go that route to check everything and then check it again. Even get legal advice.