Contracting through Umbrella Company

Volter · 12-11-2009 01:13AM #1

I have been given a job as a contractor for the next 6 months and I have been advised to get set up with an umbrella company.I am employed by an agency and they have advised me to be paid through their Umbrella Company.I am abit confused as what the Umbrella company does, They said something on the phone about paying less tax..
Anybody have any idea of rates they charge now and what expenses can you charge?

Any help will be greatly appreciated

docdolittle · 12-11-2009 01:16AM

/waits for eventual zombie post :rolleyes:

fyi: http://en.wikipedia.org/wiki/Umbrella_Corporation Just to get it out of the way :rolleyes:

Offy · 12-11-2009 01:18AM

I was an IT contractor for about five years and once I was told to get a contract with a company called IT Alliance I would have to set up an umbrella company. I looked into it and it looked like a company that did nothing but take a percentage of my income.
My advice is to set up a limited company with someone you trust and cut out the middle man.

The_Conductor · 12-11-2009 12:35PM

If you don't want the hassle of knowing the deadlines for tax returns and aren't great with the paperwork- they can be very helpful- but in general most IT contractors find them expensive and once they get to grips with the tax code etc- do their own paperwork.

I'm not aware of any tax savings from using an umbrella company (correct me if I'm wrong someone). Depending on how its structured, its possible that you may be set up as a PAYE employee- which has both costs and benefits associated with it.....?

Find out the details one way or the other.

eth0_ · 12-11-2009 03:04PM

It depends on the type of work you're doing but unless you're doing a lot of travelling/expensing/invoicing for stuff, you can easily do it yourself.

I used CXC a couple of years ago and they were terrible...their incorrect advice meant I lost a load of money I could have claimed for my rent, they didn't pay enough PRSI for me, and they are actually outsourcing the people who do your accounts and tax - it's all done by people in (iirc) the Phillipines, who are no doubt paid peanuts for their work.

It's easy enough to setup your own company and do it all yourself tbh.

nyskjerrig · 11-12-2009 03:25PM

I've started a short term contract through IT Alliance, I don't use CXC because of their massive 5% fee. Instead I went through Icon Accounting http://www.iconaccounting.ie/ who charge a flat fee regardless of your daily rate and very good at following up etc.

HashSlinging · 13-12-2009 01:08AM

I use CXC and cannot recommend them highly enough.

Mrs OBumble · 14-12-2009 11:36PM

smccarrick wrote: »

Depending on how its structured, its possible that you may be set up as a PAYE employee- which has both costs and benefits associated with it.....?

This is quite an important point: if you've only got a short contract and it doesn't get extended, then you may find that you've lost entitlement to almost all welfare benefits because you've been self employed. Where as if they set you up as an umbrella-co employee, you have to pay the employer PRSI from your contract money, but you keep the "stamps" up.

It all comes down to how likely it is that you'll get another contract afterwards.

Sleepy · 15-12-2009 12:41PM

I'm currently working through an umbrella company in the UK.

In terms of the reduced tax bill - it's that your business related expenses (hotels, flights, mileage etc) are deducted from your salary before your Income Tax is calculated.

The chief advantage as far as I'm concerned is that an umbrella company allows you to keep your PAYE worker status while working as a contractor. If you want to contract long term, you're better off with your own Ltd company (as you can also save on VAT) but this would invalidate you from claiming social welfare if it doesn't work out (i.e. when your contract expires and you can't get another one).

Not all umbrella companies are that expensive. I'm currently paying £9.99 a week (which is also claimable as a business expense) to a company called nasa consulting, it's a far cry from the €300 or so per month which many of the Irish umbrella companies charge.

DeadParrot · 20-01-2010 06:51PM

I'm kinda going down this route at the moment.
Is going through a UK company always an option?

Thailand87 · 23-08-2010 10:42AM

Sleepy wrote: »

I'm currently working through an umbrella company in the UK.

In terms of the reduced tax bill - it's that your business related expenses (hotels, flights, mileage etc) are deducted from your salary before your Income Tax is calculated.

The chief advantage as far as I'm concerned is that an umbrella company allows you to keep your PAYE worker status while working as a contractor. If you want to contract long term, you're better off with your own Ltd company (as you can also save on VAT) but this would invalidate you from claiming social welfare if it doesn't work out (i.e. when your contract expires and you can't get another one).

Not all umbrella companies are that expensive. I'm currently paying £9.99 a week (which is also claimable as a business expense) to a company called nasa consulting, it's a far cry from the €300 or so per month which many of the Irish umbrella companies charge.

Can you please show me an example of when an Irish Accountancy firm is charging you €300 a month! I am being charged €65 a month. You can not always run through an Umbrella company in the UK. I hate when people give the wrong advice and pretend they know what they are talking about, If you are not sure, call the Revenue and ask if you are allowed to run your finances via a UK company.

shoegirl · 23-08-2010 09:56PM

I'm sure there is an opening there for accountants to provide a similar service.

The advantage of the likes of CXC etc is that timesheets, expenses, forms etc are kept on online systems and they do the billing and VAT for you.

Depends on what you want from it really. From what I hear an accountant can do your books for a year but not sure what the charges would be for similar servies to what Prima/CXC provide. I think some folk like CXC because they do have an upper cap which works out if you are on a very high rate.

sartay · 12-10-2010 11:19PM

An accountant can only do it if you have your own company.

I dont know about that UK contracting thing - how can you save tax doing that? Would be interested to know for future ref if you can!

Umbrella companies should be hassle free. You get set up as an employee and they take care of everything else for you. In terms of sorting out your taxes it should feel the same as when you were a permanent employee. Like you get a payslip and you dont have to worry about sorting out your taxes or worry about VAT and all that. But the difference is that with umbrella companies you can also claim a lot of expenses which keeps your taxes down. The point of them is that its an easy way to be able to take up a contract position without too much hassle.

I looked into sorting out my own company at one point but Ive only had a few short contracts over the years between permanent positions so I didnt think it was worth doing. The main advantage of having your own company seemed to be that you can get away with claiming more expenses and I keep hearing that the best way to have a pension is through your own company too. But if you want a quick in and out way to take up a contract, then that's where the umbrella companies are useful

somebodude · 17-10-2010 12:14PM

http://www.vantage.ie/candidates/my_accountant.html

I've used Mac (richard collins) several times over the years and can highly recommend
the professionalism.
Does what it says on the tin, all that horrible paperwork etc etc, just give him a call.

czar1 · 04-01-2011 06:05PM

Out of curiosity Volter, who did you end up going with? I am expecting a job offer (fingers crossed) in the next couple of weeks and would like to know which was the best option (i.e. easier to use, more money in the pocket at the end of the day) - umbrella vs limited.

Volter · 04-01-2011 08:32PM

czar1 wrote: »

Out of curiosity Volter, who did you end up going with? I am expecting a job offer (fingers crossed) in the next couple of weeks and would like to know which was the best option (i.e. easier to use, more money in the pocket at the end of the day) - umbrella vs limited.

I use umbrella company through CXC. The service is great , but fee is expensive. I cannot recommend them highly enough.

czar1 · 07-01-2011 12:46AM

Thanks Volter!

kate156 · 30-06-2011 06:58PM

Hello
I have just been offered an initial 6 month contract and need to join an umbrella company, I am considering ICON accounting ,If anyone is using them can they advise if they would reccomend them or are happy with other service providers..

I am 100% new to contracting as always have been a permanent employee and so this all new to me.

many thanks
Kate.

tonto2010 · 05-07-2011 05:37PM

kate156 wrote: »

Hello
I have just been offered an initial 6 month contract and need to join an umbrella company, I am considering ICON accounting ,If anyone is using them can they advise if they would reccomend them or are happy with other service providers..

I am 100% new to contracting as always have been a permanent employee and so this all new to me.

many thanks
Kate.

Kate,

Did you use ICON in the end? I am starting to contract tomorrow and am wondering what their price/service is like compared to others.

Thanks

kate156 · 05-07-2011 06:06PM

Tonto.
My contract does not start until Mid August so I have not committed to ICON or any other supplier as yet. I am also waiting for my recruitment agent to let me know if they will deal with ICON .. needs to do some audit checks on them. The guy I spoke with on the phone at Icon was pleasant and not overly pushy so I think I will work with them if possible.

best of luck with the contract.
Kate

Dagon · 28-08-2011 01:50AM

Just wondering why you went with Icon when Fenero and Nasa (UK) seem to be the cheaper options? It's 25e per week with Icon (umbrella company provider).

I'm currently after accepting a contracting position, and am also trying to figure out what is the best option. Fenero and Nasa look like the cheapest

sartay · 12-09-2011 10:45PM

Dagon wrote: »

Just wondering why you went with Icon when Fenero and Nasa (UK) seem to be the cheaper options? It's 25e per week with Icon (umbrella company provider).

I'm currently after accepting a contracting position, and am also trying to figure out what is the best option. Fenero and Nasa look like the cheapest

i can recommend Fenero if that's any help. Used them for a couple of contracts over the last 18 months or so. I used CXC a few years back and found them to be very good. But Fenero have been just as good and much cheaper. If you can find a good reputable company I dont know why you'd pay extra - it's basically the same service that they all provide. You just want to make sure they are efficient and do everything they can to keep your tax down.

Havent heard of Nasa before though - anyone used them? Do they operate in Ireland? They seem to be UK based.

twilight_singer · 13-09-2011 10:32PM

sartay wrote: »

i can recommend Fenero if that's any help. Used them for a couple of contracts over the last 18 months or so. I used CXC a few years back and found them to be very good. But Fenero have been just as good and much cheaper. If you can find a good reputable company I dont know why you'd pay extra - it's basically the same service that they all provide. You just want to make sure they are efficient and do everything they can to keep your tax down.

Havent heard of Nasa before though - anyone used them? Do they operate in Ireland? They seem to be UK based.

+1 for Fenero. Have been using them for the last 3 months and found them to be excellent. They give plenty of advise re expenses/taxes and always get paid on time.

tonto2010 · 14-09-2011 12:48AM

I went with Prima in the end, always prompt and good communication, cost 100 euro a month. I would recommend them

allibastor · 14-09-2011 11:02AM

hey OP.

I have used CXC in the past a good few times, and always kept coming back to them. they were good, yeah the fee is a bit much some times, depends on how much you earn. the most i ever payed was 70 euro for a week where i earned wel over 1500 euro. they are also good if you ever get audited, which did happen to me once. it was all sorted without much intervention from me at all and the tax man was very happy in the end.
i know they also are very handy to get on the phone and have a chat if you need anything.

aindriu80 · 08-10-2011 06:57PM

Just a question, if you have a limited company of your own will one of those umbrella companies take you on and do your tax and pay you into a personal account ?

I do not wish to have to set up a company account with a bank but want to use the limited company I set up for the contract

Any answers would be great

eslsys · 12-10-2011 06:35PM

aindriu80 wrote: »

Just a question, if you have a limited company of your own will one of those umbrella companies take you on and do your tax and pay you into a personal account ?

I do not wish to have to set up a company account with a bank but want to use the limited company I set up for the contract

Any answers would be great

If you have a limited company and you are contracting to an emloyer, the most efficent use of your funds is to invoice the company and get paid directly by the employer - there are no fees by doing it this way to an umbrella company. You will however need to sort out a bank account to lodge payments for work undertaken.

Others have mentioned in this thread how much various umbrella companies such as CxC will charge you (€125 to €300 per month). The fact you have your own limited company should not matter - you can still use an umbrella company. Depending on the service you choose, they can do your taxes and make payments etc

palethinboy · 24-01-2012 05:28PM

This may not be the right type of question, but how "creative" with your expenses do these company's allow you to be?

I'm sure that question will raise a few eyebrows so feel free to PM your opinions. I'm looking to maximise my take home pay as the rate i've been offered is not so great.

Eoin · 24-01-2012 09:01PM

palethinboy wrote: »

This may not be the right type of question,...

It's not really - best talk to an accountant.

srsly78 · 25-01-2012 12:36AM

Umbrella companies generally have a very limited interpretation of the allowable expenses rule. You are much better off operating through a limited company. This way you save money, and even hassle sometimes. In the past I had to mail the Umbrella company receipts, and fill out all their forms every month. If you plan on being a contractor for the long-haul you definitely want your own company. You will have to pay for an accountant, but they often work out cheaper (shop around) and give better financial advice regarding pension and expenses etc.

Most of what you need to know about expenses is here: http://www.revenue.ie/en/tax/it/leaflets/it54.html

Best to claim the unvouched subsistence allowance. Whenever possible pay for stuff online, so receipt is in your email where it won't be lost. For anything with a paper receipt, take a picture using your phone, and store that in email also.

If you are just doing contracting for few months, then no do not set up a company... Once you are a director there is a legal responsibility to file returns etc.

Carpet diem · 18-09-2014 10:02PM

Can you pay into pension while an employee in an umbrella company ?

Contracting through Umbrella Company

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