Specialist contractor and freelancer accountancy firm FW Accounting has joined a campaign to help individuals working under the auspices of a UK Umbrella Company determine whether they could save up to 11% of their annual earnings by adopting a more efficient approach.
The move follows the publication of research by Timesheet Finance provider UC Finance, which reveals that the estimated 200,000 people in the UK currently working through an Umbrella Company could be losing an unnecessary £1 billion a year in taxes and administration fees. Responding to a clear demand for contractors to investigate the alternatives available to them, FW Accounting have joined the campaign to get freelancers on the right financial track by offering free company incorporation as part of a comprehensive consultancy service.
“Working via an Umbrella Company is an option that has been widely adopted by many contractors and freelancers as a quick and easy approach to self-employment, and indeed for many that is an arrangement we expect will continue to work well. However, with evidence emerging to suggest that some people could generate considerable savings by adopting an alternative approach, we are delighted to have joined the campaign to offer support to individuals wishing to investigate the lower cost options available to them,”
said Mervyn Stanley, Business Development Director for FW Accounting
Recognising that one of the biggest barriers for contractors switching to limited company status is in maintaining a steady income throughout the changeover period, FW Accounting – which has over 3000 contractors, freelancers and self-employed workers on its books – has teamed up with Timesheet Finance providers UC Finance and business insurance specialist Qdos to offer a solution to Umbrella workers who may feel they’ve chosen the wrong option.
Individuals considering making the move can use UC Finance’s custom-built comparison calculator to work out if they’d save money by doing so. If the results are positive and they subsequently wish to convert to a Limited company format, FW Accounting will provide free company incorporation to help them on their way, with Qdos supplying the necessary business insurances and UC Finance stepping in to provide the required bridging finance.
Provided their contract is IR35 compliant, and the contractor is prepared to manage and operate their own business, then a Limited Company may actually be the best option. Certainly, the campaign’s organisers believe that it is more tax efficient, citing examples where any contractor earning £350 a day would be £10,000 a year better off in a Limited Company.
Alasdair McGill, Chief Executive of UC Finance, commented:
“For many individual contractors, working through an Umbrella Company is frequently the first option they’re presented with by recruiters, who are keen to get them working as soon as possible. However, this is clearly not the best solution for everyone. Up to 50% of freelancers working under this arrangement could be paying over the odds – amounting to £1billion a year UK wide – and we’ve identified a clear need for a service to help them measure and manage the benefits of switching.”
Do I Need An Accountant If I’m Self-Employed? Starting out as a freelancer or contractor can be quite daunting, and there are many different things to consider, including whether or not to engage an accountant to take care of your
What Legal Issues Might Contractors Face?
From tax investigations to client disputes and defamation
Does Length Of Contract Impact Your IR35 Status?
Should contractors be wary about working for a client over a long period of time?