There is usually a substantial financial benefit for people who are operating through an umbrella company to set up and operate through their own limited company.
People are often under the misconception that using a limited company is too complicated or will cause too much time consuming paperwork . This is simply not true! The paperwork is usually very minimal compared to the large savings it can make.
When using a limited company you are usually able to claim significantly more expenses which will be offset against your income and therefore result in a lower corporation tax liability and ultimately more money in your pocket.
You as the owner of the business will usually draw money from the company in the form of a small salary with the balance being taken as dividends. This technique avoids incurring employers national insurance of 13.8% and employees national insurance of 12%.
For those of you who are incurring a higher rate income tax liability, a limited company can have the additional advantage of helping you avoid higher rate tax. If this is a situation which affects you, please call us to discuss techniques you may be able to use to avoid incurring higher rate tax.
