Award winning service! Sign Up Limited or Umbrella for recruiters (3 minutes to read) HomeLimited or Umbrella for recruitersLimited or Umbrella for recruiters There have been many legislative changes in recent years but how do they really affect you when placing a contractor or freelancer? Contractors only have two options: 1. Work through a PAYE Umbrella Company and have all of their income tax and national insurance contributions taken care of. A PAYE Umbrella service is where the contractor becomes an employee of the Umbrella Company and is contracted out to provide their services to the client. 2. Operate through their own Limited Company, where the contractor has to take care of all of the financial and administrative responsibilities of running their own business. Contracting through a Limited Company is a very tax efficient solution but there is a certain amount of paperwork involved and does require more work than using an Umbrella Company. Will operating through a Limited Company avoid the Agency Workers Regulations? Quite simply – no! In order to be outside the scope of the AWR, the individual needs to be able to prove that they do not work under the supervision, direction and control of the end client; this cannot be established by inclusions in a contract but is determined by working practises. Which Option is best for my Contractor? A full review of the pros and cons of operating through an Umbrella Company and Limited Company can be found below: PAYE Umbrella Company Limited Company Pros Pros Very easy to use, you simply enter your timesheet and expense details and wait to be paid. The most tax efficient way of working. All tax and NI is deducted before you receive your money, so you will have no further taxes to pay. You keep complete control of your financial affairs. Ideal for short term contracts Access to the Flat Rate VAT scheme. Perfect if you are unsure if contracting is for you and you’re really just in between permanent jobs. Running your own business isn’t difficult (it may be time consuming but it isn’t hard). Most importantly someone else will be doing all the paperwork. Greater opportunity for tax planning than PAYE Umbrella Cons Cons Your salary will be subject to full PAYE Tax and NI. There is much more paperwork involved You are reliant on the umbrella company to collect your money from the client or agent and then to pay it to you. Contractor Umbrella will chase any overdue payments, on your behalf, free of charge. Can be costly if you contract for a very short period of time and than go back to permanent employment. Not ideal for low earners. You may also like to read Case Study – Moving from Permanent Work to Contracting "I had always been in permanent employment. A few of my old colleagues left permie work to go into contracting ... Read More Case Study – Moving from Limited Company to an Umbrella Company “I was a permie until the big crisis in 2001, where I got made redundant twice in one year. Nice ... Read More Umbrella vs. Limited – which is the best option for me? The three main options are to set up your own Limited company, go self-employed or work through an Umbrella company. Self-employed ... Read More Most Popular Guides How is my pay calculated? What is Employers National Insurance? What is IR35? How does an Umbrella company work? Umbrella vs. Limited Ask us a question Resource Categories Starting up Umbrella Company Advice Contractor Tax Industries Calculate Your Take Home Pay Comprehensive Contractors Guides Sign up to Contractor Umbrella The complete umbrella package... With the flexibility to work either limited or umbrella. SIGN UP TODAY Want to learn more about contracting? We understand you might have lots of questions, so why not give one of our friendly experts a call on 01206 591 000. Alternatively, sign up using this form and we will send you an email, guiding you through the steps you will need to take. SUBSCRIBE ME COOKIES GDPR POLICY GENDER PAY GAP COMPLAINTS CONTACT US ANTI-MODERN SLAVERY The website and its content is copyright of Contractor Umbrella 2018. All Rights Reserved. Contractor Umbrella Ltd is a company registered in England and Wales with Company Number 4324081. VAT Number 780351338. Our registered address is Unit 36 Silk Mill Industrial Estate, Brook Street, Tring, HP23 5EF.