PAYE Umbrella Companies
PAYE Umbrella Companies do virtually everything for contractors. For a small monthly fee they basically take over all the admin from them. The contractor becomes, to all intents and purposes, an employee of the company. They don’t have to worry about invoicing. The company does that for them. They don’t have to worry about doing VAT returns. That no longer applies. They don’t have to hire an accountant. They don’t have to worry about doing end-ofyear-returns. All those drags on the life of a contractor are taken away from them. They are an employee of the company.
However, the big advantage to them over a normal permanent jobs is that they still get paid contract rates. They do have to pay the company’s fees. However, that is nearly offset by not having to hire an accountant to do ones books. They get many of the benefits of permies but getting the money a contractor gets.
Of course, they’ll pay more in tax than a Limited Company contractor. However, they don’t have to worry about IR35. More precisely they don’t have to worry about being caught for IR35. They don’t have to worry about the letter coming through the post from the taxman. They don’t have to worry about the knock on the door. They don’t have to worry about an IR35 investigation lasting years with potentially tens of thousands of pounds in back tax plus penalties to be paid.
PAYE Umbrella Companies are a secure place for contractors. All the contractor has to do is to type in his or her weekly timesheet details plus any expenses and the company does the rest. The company invoices the client, deducts expenses, pays the contractor and sends the tax money off to HMRC. THis type of relationship suits contractors who don’t want any hassle. It suits contractors who want to concentrate on contracting. It suits those who want to hand over the admin to someone else. And it suits those who want to sleep soundly in their beds at night.