Is setting up an umbrella company a brilliant option for contractors? Yes.

Is setting up an umbrella company a brilliant option for contractors? Yes.

/ /
Posted ByAdmin

If you haven’t been living under a rock you will agree that 2016 has not been very kind to contractors. Early in 2016, the Travel & Subsistence (T&S) legislation was introduced making it impossible for contactors to claim tax and National Insurance Contribution (NICs) relief on travel and subsistence expenses for ordinary commute from home-to-work, if their contract is caught under IR35.

Secondly, it’s now the responsibility of recruitment agencies to determine whether or not a contractor is operating inside or outside IR35. The agencies, from Spring 2017, will be held liable for paying any associated tax and NICs to HMRC. Thirdly, contractors running PSCs will no longer be able to avail the 5% tax-free allowance deduction – which according to us is the biggest blow to limited company contractors.

According to a recent research done by the Freelance and Contractor Services Association (FCSA), the UK’s largest independent trade association, there is an increase in demand for umbrella workers among blue collar and individual workers. Out of all respondents, 75% of them agreed that the percentage of umbrella employees now eligible for T&S expenses is just 10% or less.

Moreover, this figure varied according to the specific job role and whether or not there is a right to Supervision, Direction and Control. This is what makes the umbrella employment a positive choice for the flexible labour market as well as recruitment agencies and end clients. It is the perfect option for those who don’t wish to get trapped in the IR35 web, concluded the research.

We agree this is an ideal solution for any temp worker who is doing short term contractual projects or does not want the hassle of operating a limited company. The payroll solution ensures that you don’t have to worry about complicated legislations such as agency legislation, MSC legislation and IR35.

Is Bradleys Payroll Solutions right for you? Talk to us and get clarity!