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Sometimes, being an employee of an umbrella company can work better than setting up your own limited company. Perhaps you have concerns about being deemed inside IR35 after the April 2021 reforms, or one of your clients has already announced that they will be placing you inside. Here at Nixon Williams, with our Platinum and Professional packages, we allow you to switch seamlessly between Limited and umbrella.
What is an umbrella company?
Put simply, by opting to be paid through an umbrella company on your assignments you effectively become an employee of the umbrella company. You will submit time sheets outlining the number of hours worked and any expenses incurred.
The umbrella company will invoice the agency on your behalf and will provide a payroll service, process any admin and pay you your salary.
You will receive a payslip and your wages will go directly into your bank account minus any PAYE tax, National Insurance contributions and a small margin to cover the administration costs.
Go UmbrellaWhat are the benefits of using an Umbrella company?
There are many benefits of an umbrella company. The most exciting one for most people is the flexibility and freedom but without the headache of the paperwork.
All of your administration is taken care of, with the exception of you completing your time sheet. The umbrella company calculates your tax and national insurance contributions and will make payments to HMRC. Additionally, they can advise you on the expenses you may claim to help maximise your income while still being compliant with HMRC’s rules.
Another benefit is that you get to keep many of the employment rights you had when working in a permanent role such as sick pay, holiday pay and maternity pay.
Stay out of the rain with Nixon Williams Umbrella.
Join our UmbrellaWhat is IR35 legislation?
A hot topic, it’s possibly the most important piece of tax legislation. That sentence makes it sound quite menacing, however, its purpose is to decide whether or not the terms of your engagement make you an employee of the company you’re working for/providing a service.
What happens to my limited company if I work as an umbrella employee?
If your assignment is deemed inside IR35 then you may choose to go umbrella. But what happens to your limited company? Below are some of your options:
- Dissolution (‘Striking off’) – This is one way to close the company and have it removed from the official register at Companies House
- Members’ Voluntary Liquidation (MVL) – If there is over £25,000 in the business this is the tax efficient way to close it down.
- Go non-trading – If you’re working as an umbrella employee but you can still see yourself needing your limited company in the future, you may wish to go non-trading. With our Platinum and Professional packages, we allow you to switch seamlessly between Limited and umbrella.
How to sign up to umbrella
If you’re new
Becoming an employee of an umbrella company is a relatively straight forward process and can be done on the day you get in touch. Our friendly advisors will guide you through everything you need to know and can answer any questions you might have.
Get in touch today
There’s certainly a lot to consider when choosing an umbrella company so let’s have a chat about your options.
Fill in the form below or call us on the number above.