What are the benefits of being paid through an Umbrella Company?

by nrpnewsite | Aug 3, 2022 | All Articles, Blog, HMRC, Legislation, News, Recruitment Businesses, UK Employers

What are the benefits of being paid through an Umbrella Company?

The Benefits of Using an Umbrella Company

When looking at what an Umbrella Company is and how it can benefit you – being employed by an Umbrella company is something which offers a wealth of benefits to contractors.

But, to understand the benefits, we must first understand what an Umbrella company is.

An Umbrella company undertakes the employment of temporary workers supplied by recruitment agencies.

It pays the appropriate tax on behalf of the contractor, as well as sending them a payslip weekly or monthly, depending on how frequently they get paid.

In essence, a recruitment agency finds work for a contractor, and an Umbrella company pays them.

Flexibility in using an Umbrella

Using an umbrella company is a great way to dip your toe in the water that is working as a contractor.

You have the option to opt in and opt-out of self-employment, so you can try both and make your own decision on which you prefer.

Umbrella Companies can aid with finances

Contractors don’t want to spend unnecessary time nursing their own accounts. An Umbrella company manages the contractor’s tax payments so that there are no nasty surprises when the tax bill arrives.

Due to the ever-expanding and confusing presence of IR35, being paid as a contractor through an Umbrella company.

Employee Benefits when working through an Umbrella Company

When you work as an Umbrella contractor, you become an employee of the Umbrella company, thus you benefit from: sick pay; maternity/paternity pay; holiday pay.

This is a huge added layer of security that a contractor wouldn’t get if they were self-employed.

Taking the safe route when choosing an Umbrella Payroll company

Safest route

As an added safety net to recruiters, contractors and end clients, the recommended type of payroll company would be one that is FCSA Accredited. The FCSA is seen as the industry standard for Compliance and Customer Service and as New Red Planet are FCSA Accredited, there is no need to search any further.

How We Can Help…

If you are looking for a reliable, best-in-practice umbrella company that prides itself on its client-focused approach, contact New Red Planet today using the form below or call us on 0161 713 1730.

Find out more

New Red Planet: providing a flexible choice of FCSA Accredited payroll offerings specially tailored for the Construction Sector.

Tax avoidance or Tax evasion?

by nrpnewsite | Jul 28, 2022 | All Articles, Blog, Freelance Professionals, HMRC, Legislation, News, Recruitment Businesses, UK Employers

Tax avoidance or Tax evasion?

What is the difference between Tax Evasion & Tax Avoidance?

Tax avoidance or Tax evasion? The boundary between tax avoidance and tax evasion is often blurred, resulting in it being difficult to distinguish one from the other.

Tax avoidance is the legal swerving around the bullets of tax liabilities, using imaginative yet permitted accounting. On the other, more aggressive hand, lays tax evasion.

Tax Evasion

Tax evasion is objectively illegal, and subjectively immoral.

For example, a firm exaggerates their expenses or accounts for personal expenses as business expenses to minimise the amount of profit on which they are obliged to pay tax.

This is classed as tax evasion because the firm is being deliberately deceitful about the value of their expenses.

If you create an objectively false financial statement, there is a healthy chance that you are committing tax evasion.

Tax Avoidance

On the safer side of this fence, we can find tax avoidance.

Tax avoidance is often seen as immoral, though not against the law, thus isn’t prosecutable.

When firms exploit the skill of creative accounting to avoid tax, they tend to ignore the direction of their moral compass.

Some tax avoidance schemes, whilst being legal, can lead to contractors being handed 5-figure tax bills, potentially pushing their retirement plans back by several years.

Compliance

Several tax avoidance schemes are commonplace in the temporary worker sector, resulting in millions of pounds of lost revenue for HMRC.

These include mini-umbrella company (MUC); loan scheme’ other disguised remuneration schemes.

It can be difficult to identify these schemes, unless regular and thorough due-diligence checks are carried out on all parties in the supply chain.

A guide from HMRC on how to reduce your risk of using an umbrella company who operates a tax avoidance scheme can be found in this link Check your Umbrella Scheme.

New Red Planet and Compliance

New Red Planet are an FCSA Accredited umbrella company, undergoing regular legal and financial compliance checks with industry leading tax and legal firms.

If you are a contractor or agency and would like to discuss any aspect of this in more detail, please contact New Red Planet today to discuss the options available to you or your contractors. New Red Planet today using the form below or call us on 0161 713 1730.

Find out more

New Red Planet: providing a flexible choice of FCSA Accredited payroll offerings specially tailored for the Construction Sector.