Umbrella Vs Limited

Introduction:

Operating via an umbrella is a popular method of working, historically for short-term, low income contracts. Using an umbrella means that the individual is not subject to the IR35 legislation and does not have to consider many of the duties and responsibilities of running a Ltd Company whilst still being able to perform contract work.

As a result of tax changes from April 2016 however, operating via an umbrella company now means that expenses relating to travel and subsistence cannot be claimed back as a legitimate business expense.

Whilst using an umbrella company takes away much of the administration of running a company and the worries of IR35, operating through a limited company is the most cost-effective and tax-efficient way of working, and with QAccounting at your side, is arguably just as easy as working through an umbrella company.

For longer-term, higher rate contracts, it is more beneficial to trade as a limited company. Not only will there be significant tax savings, but you also have a higher level of control over your finances.