5 Things You Must Know About Umbrella Companies
An umbrella company is defined as an employer or agency contractors who work under a fixed term contract assignment, usually through a recruitment employment agency. Contractors can greatly benefit with the emergence of this kind of company. This company is for contractors who do not like paperwork and red-tape because they do not need to do the job. In general, an umbrella company is considered as a ready-made and ready-to-go limited company which deducts a certain fee to the gross earnings and you can then use instead of submitting yourself to the pressures of managing your business or a limited company. We presented five things you need to know about umbrella companies.
1. No commitments.
One of the benefits of an umbrella company is that there is absolutely no commitments, either short term or long term. You can use the umbrella service within the period of your contract. You can use an umbrella company for a single day or for many years – anything in between. Therefore, if you prefer to work under a certain period of time, it is recommended to work with an umbrella company.
2. Sophisticated administration service.
Umbrella companies handle all the paperwork needed and you don’t need to worry about it. Contractors chose this kind of company because they wanted a quick solution to the burden of setting up a limited company, carrying out tasks like payroll, dealing with the government, accountants and so much more.
3. Avoidance of IR35.
If you work through the umbrella company, you will not be affected by the IR35. IR35 is a piece of tax legislation designed to catch contractors and freelancers that have an employee relationship with their clients, yet fail to pay the correct amount in PAYE taxes.
4. You can still have your full employment rights.
Being an employee of an umbrella company keeps your full employment rights just like any other employee from other companies. Your income will also be made up of a gross salary and expenses. It simply means you are still considered as a regular employee.
5. Claiming maximum allowances offered.
Being in an umbrella company, it allows you to claim up to a certain limit for subsistence and accommodation, however, that doesn’t mean that you can claim the maximum allowance every single day. With this, it can still help you with your expenses.
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