New to Contracting: Trading Options

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Umbrella Company Employee

Becoming an Umbrella Company Employee is a middle option between PAYE and your own Limited Company. It is an operating structure set up by a third party. A contractor would become an employee of this third party company, and they would submit their time-sheets to them. The Umbrella Company will, in turn, invoice the end client or agency for the work done by the worker.

The Umbrella will then pay the employee (less the Umbrella fee) their earnings as a PAYE salary.

The 1st Option rating for this trading option indicates that;

• It provides little control as the contractor is an employee of the Umbrella Company
• Earnings and taxation are similar to a straightforward PAYE scheme. There is some scope for claiming limited travel and accommodation expenses, but very little scope for claiming expenses beyond this or reclaiming VAT on purchases
• Flexibility is marginally better than being a direct employee, but is still limited to the employers' operating practices, and there is no scope to grow or diversify.
• There is just a shade less administrative work to do than running your own company - up to 40 minutes a month.

Next>

1. New to contracting
2. Benefits
3. Trading Options
4. - Your Own Company
5. - PAYE Employee
6. - Umbrella Employee
7. - Self Employed
8. - Summary
9. Running Your Company
10. - Getting money in
11. - Expenses
12. - Payroll
13. - Bookkeeping
14. Costs
15. Next steps
16.  

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