Moving from an Umbrella Company to a Limited Company

If you are a Contractor or Freelancer and are wondering whether it is difficult to move from an Umbrella Company to a set up working through your own limited company then the answer it that it is very easy and in most cases financially very beneficial.

The first thing you need to do is to inform your Umbrella provider that you no longer require their services. Then all you need to do is form a company through our online system, open a company bank account and spend a few minutes each week updating your online FreeAgent account which we include as part of our service.

It is accepted within the Contracting profession that operating through a Limited Company is the most tax efficient means of operating and will ensure that you keep more of your money from the tax man.

The accountancy fees associated with running a limited company are comparable to the commission charged by an Umbrella company, but the tax benefits significantly exceed those available through the umbrella route.

If I am inside IR35, is it still worth it?

If your contract and working practices are caught by the IR35 legislation you can still claim expenses relating to traveling and accommodation plus an additional 5% of your turnover as a general allowance. You will also be able to benefit from the flat rate VAT scheme.This means that you are still likely to be better off operating through a Limited Company. It also means that you are able to put any other income streams you may have through your company and will be ideally placed for your next contract.

We are experts in the field of IR35 and this is reflected in our accreditation with the Professional Contractors Group . We would very much welcome the opportunity to discuss and advise on your IR35 status further.

Freelancer Accounting is a specialist provider of fixed fee accountancy services to freelancers and contractors in London and the South East of England.

We understand that tax is complicated and we are happy to offer you face to face meetings at one of our office locations convenient to you.

You will have your own dedicated accountant as a point of contact.

We are accredited by the Professional Contractors Group (PCG) and are an ACCA Practice, so you will never have to worry about you tax and accounting affairs again.

If you are thinking of contracting or an existing contractor with questions and would like further advice, please do not hesitate to call your local Freelancer Accounting office on 0800 1357157 or email martyn@freelanceraccounting.com