IR35 Background - IR35 Rules - Beat IR35 - Ltd Co - Umbrella - Composite - MSC's - Insurance - IR35 Enquiries - Contracts - Resources
Limited Companies: << Back Next >>
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Advantages of limited companies:
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Summary:
On balance, for the long term contractor, the limited company will be the best route. The PAYE routes results in the suffering of unnecessarily high levels of tax. The composite company and umbrella routes now suffer the same drawback as a result of the MSC rules.
The limited company is by far the most tax efficient and treads the middle ground on IR35 risk. Indeed, used in conjunction with IR35 insurance, the limited company route might be viewed as low risk from an IR35 perspective.
Some online limited company providers have resolved the issues with set-up costs and administration, leaving cash flow as the only real drawback.
Switching to a limited company?
If you are operating in an umbrella or composite company but are intending to contract in the long term then it will probably be worth switching to a limited company instead. After all, you have taken the entrepreneurial risk of becoming self employed - so why should you not take advantage of the tax benefits?
How to switch:
The process of switching from an umbrella or composite company to a limited company is quite easy and probably much easier than you might imagine.
Firstly:
You will need to check to see if your umbrella or composite provider stipulates a minimum operating period or a notice period. Obviously you will not be able to leave your umbrella or composite without providing this notice or serving the minimum period.
Secondly:
You would need to arrange for your current contract to be transferred from your umbrella or composite to your limited company. To achieve this you will probably need the help of both your umbrella or composite provider and your agency. If it is not possible for you to transfer your contract, the best thing for you to do will be to wait for your current contract to expire and then to set the new contract up with your limited company rather than your umbrella or umbrella provider.
Thirdly:
On leaving the umbrella or composite, you just need to make sure you are paid the correct amount for the work you have done that is outstanding and for any holiday pay and/or dividends and/or expenses. As the umbrella or composite company will still exist and will still go on serving other contractors after you leave, it will not be shut down or stuck off or dissolved so you should not incur any fees for this.
Full index of pages:
Home Page IR35 Background - page 1 IR35 Background - page 2 IR35 Background - page 3
IR35 Rules - page 1 IR35 Rules - page 2 Beat IR35 - page 1 Beat IR35 - page 2
Beat IR35 - page 3 Beat IR35 - page 4 Ltd Company - page 1 Ltd Company - page 2
Ltd Company - page 3 Ltd Company - page 4 Umbrella Companies - page 1
Umbrella Companies - page 2 Composite Companies - page 1 Composite Companies - page 2
Composite Co - page 3 Composite Co - page 4 MSC - page 1 MSC - page 2 IR35 Insurance
IR35 Investigations - page 1 IR35 Investigations - page 2 Contracts - page 1
Contracts - page 2 Contracts - page 3 Resources 1 Resources 2 Resources 2 Sitemap
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