Moving from an Umbrella Company to a Limited Company

If you’re with an Umbrella Company but want the benefits of running your own Limited Company, then look no further; we can help (read more about umbrella companies here).  

The process is easy - all you need to do is inform your Umbrella Company that you no longer require their services, and then form your company on-line through SJD which is quick, simple and inexpensive. It takes five minutes to form a company and around 15 minutes a month managing your company affairs - not much work compared to the rewards.

Any accountant will tell you that working through your own limited company is the most tax efficient way of working. The bottom line is you’ll keep more of your hard earned money and be more in control.

How much more can I earn?

If you’re working through an Umbrella company you’ll typically be taking home 60% - 65% of your contract value, compared with around 75% - 80% through your own Limited Company. 

In addition, due to the Government’s Flat Rate VAT scheme, which enables you to keep a percentage of the VAT you charge your agency/client, you’ll make even more money, for example, a £50,000 contract over one year will be worth £1,700, while a contract for £100k will gain you £3,400. Plus, because you are saving to pay for your tax, you can also expect to make up to several hundred pounds a year in interest.

For more details on this please visit our new pages: Take home pay Limited company or Umbrella company - The Real Story and 'how much can I earn as a contractor?'.

Aren’t fees much higher?

Actually, accountancy fees are similar if not lower than those charged through Umbrella Companies. SJD’ accountancy fees are starting from just £120 plus VAT per month; this is a fixed fee and fully inclusive service. Don’t forget that our charges are transparent and backed by our customer promise. We are the appointed accountancy firm to over 15,000 contractors and have won numerous awards - so you’ll be in good hands.

Isn’t it complicated and time consuming running your own company?

The process below explains everything you need to know. You can move to limited at any point, even mid contract. Becoming a client and setting up your own company takes only a few minutes via our on-line facility, from then on we’ll work with you to manage your VAT and tax affairs.

Our fees are fixed and we’ll provide a proactive, prompt and efficient service; all we ask you to do is a small amount of monthly admin which typically takes no more than 15 minutes and we’ll do the rest, leaving you to enjoy the rewards from your contract work.

It’s no wonder that more contractors are running through their own limited company than ever before.

I’m inside IR35; surely it can’t be worth it for me?

If your contract and working practices look like you are inside IR35 you can still claim: traveling and accommodation expenses, 5% of your turnover, benefit from the VAT flat rate scheme, and receive interest on the funds held within your own company. So yes, from a financial point of view it still could be worth it. Also, any other contract work you do could also be put through your existing company. Download our free Guide to Expenses.

The only way to be sure whether your contract falls inside or outside IR35 is to have it reviewed by a specialist. SJD are one of only three firms in the UK who advise the Professional Contractors Group on IR35 and so are well qualified to give you the correct advice.

So what do I need to do?

The first thing you’ll need to do is form a Limited Company Using our Limited Company formation service though our website you can check name availability (free of charge) and fill in the details quickly and simply on-line.

Your company will be set up within two hours, and all documentation will be sent out by first class post within 24 hours. There is a one off charge of just £125 plus VAT, for setting up your Limited Company and includes opening a Company Bank Account, VAT/PAYE registration and advice on share structure (some companies charge extra for these).

What next?

Running your own Limited company isn’t difficult especially with the assistance of a good accountant. Your accountant* at SJD Accountancy will:

  • Help you understand the best way to take the most home from your contract.
  • Help you with all liaison and correspondence with HM Revenue and Customs as well as with Companies House.
  • Help you understand what you can and cannot claim.
  • IR35 advice.
  • Complete all accounts*, dividends, corporation tax calculations and your personal tax return.
  • Provide on going year round proactive tax advice.
  • Unlimited access to your own dedicated accountant* to answer any questions you may have.

The fee for this service is starting from £120 plus VAT per month. Check our packages for more detail. There’s no minimum length of time you need to appoint us and there are no entry or exit fees.

So what is left for you to do?

  • Invoice your client/agency (we can help and provide you with a template).
  • Complete a very simple Excel spreadsheet, which should take about 15 minutes per month to fill in.
  • Manage your business bank account.

Review all of SJD's FREE plain English Guides, such as: Becoming a Contractor, Running your own Limited Company, Take Home Pay, Expenses, Step-by-step Guide to Contracting, Guide to IR35 (that you will be able to understand) plus lots more.

If you wish to appoint us as your accountants immediately, the quickest and easiest way to do so is by accessing our Client Agreement Form.

If you have any questions about contracting call our New business team on 01442 275789 or email