Contractor Umbrella Company

The Contractor Umbrella Company market has never seemed so secure. Indeed it is positively thriving. In 1999 there were very few of them. Then IR35 sprung up. After that the market was inundated with contractors. Many saw themselves as being caught by IR35. The Contractor Umbrella Company was a way of getting round IR35. Contractors could use them to claim some expenses. They could claim things like travel to work, overnight accommodation etc. They wouldn’t save as much as if they had a Limited Company. However, it was better than paying IR35 tax.

In the early days the Contractor Umbrella Company was seen as a way of avoiding the worst of IR35. For that reason people thought that the Government would eventually close them down. They thought that the Government would force contractors to pay IR35 tax. Indeed the Government did close down some of the racier schemes. They forced Managed Service Companies to close.

However, it was noticed that the Government weren’t taking in a lot of IR35 tax. Indeed it was a pittance. It was a derisory amount. It was something like £12m a year. That is nothing. The Professional Contractors Group claimed that this showed that they had been successful in fighting IR35. This was despite High Court defeats. However, what was less noticed was the success of the Contractor Umbrella Company. Virtually no contractors used them in 1999. Now there are more than 200,000 contractors who use this option now.

The Government said it was going to strengthen IR35. This can only be good for this market. The Government appears to want contractors out of Limited Companies. They appear to want them in the Contractor Umbrella Company route. The Government usually gets its way.

For a selection of good Umbrella Companies check out Which Umbrella Company

For good examples of offshore Umbrella Companies which pay out a minimum of 85% of the contractor’s take home pay, click
BestPay
and
Tower Umbrella