What To Do With Your PSC if You Switch to Umbrella

What To Do With Your PSC if You Switch to Umbrella

Jan 23, 2021

When switching to Umbrella from being a Limited Company owner as a result of IR35, what you should do with your Limited Company depends on what your future contracting is going to look like.

If it looks like all your roles in the foreseeable future are going to be either considered inside IR35 or not offered to limited company (PSC) contractors then it is probably best to close your limited company and save the accountancy and tax advice fees associated with keeping it open. If outside IR35 roles are possible in the more distant future you can always form another company at that point. However, you might want to consider whether your potential clients would require someone whose Limited Company has been trading for a given period of time.

If there is a possibility some of your roles in the foreseeable future may be outside IR35 then it may be sensible to keep your Limited Company open to accommodate these roles. Where you are not trading through your Limited Company, you should consider asking your accountant if they are prepared to reduce your accountancy fees especially if your Limited Company has not traded for over a year to its accounting period end, in which case dormant accounts could be submitted to Companies House, potentially saving you money.

Keeping your Limited Company while contracting via your Umbrella employer can give you the best of both worlds. You can complete your assignments through an Umbrella company without worrying about your IR35 status, and resume trading through your PSC again if determined to be outside IR35 in future roles.

If you are likely to have a regular mixture of outside IR35 and inside IR35 roles then you should contact your Umbrella employer to see if they can find an option to help minimise your accountancy fees in these circumstances.

To find out more about Crest Plus’ FCSA-accredited Umbrella company,  click here. Or, if you have any questions about switching between ‘inside’ and ‘outside’ IR35 contracts, get in touch with us on 01244 684700, our IR35 experts will be happy to help.

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