If you’re thinking about stepping away from your duties as a limited company director for a period of time, or you’re concerned about your IR35 status, discover why working under an umbrella company could be the ideal solution – as well as how to make the switch.
How does the switching process work?
If you currently work through your own limited company, switching from an intermediary to an umbrella is easy and there are just a few steps involved:
Looking for an umbrella company?
Thanks to our sister company, Parasol, we’re able to provide a compliant umbrella solution to clients. To find out more about how the process works or to make the switch, just fill in your details and we’ll be in touch.
Closing your limited company
Depending on your circumstances and the length of time you intend to step away will influence what you do with your company. If you only plan to work under an umbrella company for a short period of time, making your company dormant may be the best solution. On the other hand, if you’re looking for a new way of working, there are other options available, such as dissolution.
What options are available to me?
- Dissolution ('Striking off')
- Members' Voluntary Liquidation (MVL)
Find out more about your options in our guide.
What about IR35?
Many contractors are looking to make the switch to an umbrella company to avoid the risk of their end-hirers deeming their contract as inside IR35.
What is IR35?
IR35 is a tax avoidance legislation which was introduced as a way to combat ‘disguised employment’. If your contract is deemed inside IR35, your end hirer will be responsible for paying tax and National Insurance on your behalf, and will become your employer (for tax purposes).
In April 2020, the private sector reforms are changing the responsibility for determining the status of an assignment from the contractor to the end hirer. This change will bring the private sector in line with the public sector reforms in 2017.
What could the private sector reforms mean for me?
The impending IR35 reforms to the private sector are making many contractors question their status. If your end client deems your assignment inside IR35, you will no longer have access to the tax benefits associated with running your own limited company.
How does an umbrella company work?
Working under an umbrella company is simple:
1. Sign a contract with an umbrella company
You will then sign an employment contract with the umbrella company and become an employee of this umbrella company.
2. Submit your timesheet each week
As an umbrella employee, you will be required to submit a timesheet with information about all of the hours you have worked, along with any expenses to claim. Your umbrella company will invoice your agent/client for the work you have done and will receive funds on your behalf from the agency.
3. The umbrella pays your wages
PAYE tax and National Insurance contributions are deducted on your behalf. You will be sent a payslip, and your wages will be paid directly into your bank account
Chat to an expert
Call our team of specialists to discover how you can seamlessly switch to become an Umbrella employee.