Available Choices
There are three main ways for contractors to operate in the UK.
The method of operation for a contractor is a matter of personal
choice but we can point out some reasons for adopting
one method over another.
Umbrella Companies
This is the the simplest way of getting money out of the system and into your pocket and
may be the correct choice for you if ...
- You are new to contracting and do not expect to remain contracting long term.
- You are IR35 caught and prefer to take the simplest approach in favour of saving
possibly very little money by running a limited company.
- Your contracting income is low - most umbrella companies charge fees based on turnover.
Limited Company
This is slightly more complex than using an umbrella but can offer financial advantages.
If you choose this route your first requirement will be a good accountant
It may be the correct choice for you if ...
- You expect to be contracting long term.
- You are not IR35 caught and want to make maximum tax savings without using offshore schemes.
- Your gross contracting income is £30,000 or more.
Offshore Schemes
The offshore option has been around for many years and is the best way to maximise
your income from contracting. The methods of operation are complex but returns from
turnover of 80% or more are achievable.
Here at 4Contractors we currently operate limited companies using our recommended
accountant but if the government carries out its budgetary promise with
IR591 we will be considering offshore options and would advise other contractors to prepare
to do the same.
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