From Limited Company to Umbrella – Changing the Way You Work?

From Limited Company to Umbrella – Changing the Way You Work?

Apr 11, 2017

From limited company to umbrella – what’s involved in changing the way you work?

If you’re a contractor in the public sector you could find you’re affected by new rules which came into effect on April 6th.

The changes make a difference to anyone who contracts through their own limited company to a public sector organisation such as the NHS, police, local authorities and schools. They’re part of a Government plan to raise an additional £25m a year for the Treasury, so will mean higher deductions and less take-home pay. That’s because these and all other public sector employers are now, in most cases, required to take income tax and National Insurance at source before your limited company gets paid. Some public bodies have simply decided not to pay any contractor via a PSC.

What options are available to you?

If you are affected by the new rules, you will need to consider whether your options (for more detail on all your options click here). It is likely joining an umbrella company, like Umbrella Plus, will be the most financially advantageous step for most public sector contractors who are affected by the rules.
As an umbrella company employee, you will be subject to PAYE and National Insurance deductions but on the plus side you will be entitled to receive employee benefits such as sick pay and access to a company pension scheme.

Joining an umbrella company

Our team of specialist relationship consultants can provide you with more information, answer your questions and help you determine the best option to suit your individual circumstances. They will be able to provide you with a written illustration of the working options available to you and the take-home pay you can expect to receive.

What to do with a limited company you no longer use

If you choose to be an employee of Umbrella Plus, you will work with a dedicated accountant who can help you determine what to do with your limited company, whether you keep it open, allow it to lie dormant or close it completely.

If you choose to keep it open or lie dormant (perhaps to protect the use of your company name or for contracts you undertake in the private sector) you will still need to submit annual accounts to Companies House and tax to HMRC. If you wish to close your limited company, we will work on your behalf to finalise accounts and tax returns and ensure the closure process is done correctly and in a compliant and timely manner.

You can find out more about the new off-payroll rules here.

For further information or to discuss your individual circumstances, please fill in our form and we will get back to you as quickly as possible, or you can call our specialist contractor accountants on 01244 684700 who will be pleased to help.

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