Working with an umbrella company one of the more common methods used by locum veterinary contractors, it’s easier and less admin than running a limited company, and working self employed is not allowed with HMRC if you work under supervision. Almost every role we offer has some level of supervision which makes it a choice of either limited company or umbrella company, so if you are considering umbrella companies then we’ve compiled some useful information.
Where to start?
Finding the right umbrella company can be daunting as there are many companies to compare for the, what an umbrella company do, to put it basically, is to become the employer of the contractor in the eyes of HMRC, they will pay the contractor PAYE (Pay As You Earn) and deal with the tax and National Insurance contributions, they deal with HMRC, so if you work solely via an umbrella company, you will not need to do your own tax return. It’s easy to register and a quick Google search will bring plenty of results, I’m not going to make any recommendations, but if you do want to know some suggestions then get in touch via the contact us page.
Why use an umbrella company?
A good umbrella company will take away the hassle of invoicing and dealing with your own tax affairs, registering should be a simple process, most will have you registered and ready to go within minutes. Commonly you will have a timesheet that needs to be verified by the practice, after you’ve registered your only responsibility is to get these timesheets to us or the umbrella company. They will then handle invoicing, and pay you with the correct tax deductions, there are other benefits with umbrella companies and they do vary depending on who you go with, it’s always worth checking the features and benefits when looking for an umbrella company, most will offer Employers Liability Insurance, Public Liability Insurance and Professional Indemnity Insurance, but do check that their insurers cover the veterinary profession.
Umbrella company or limited company?
Anyone can work via an umbrella company, the question is where is the best value for your take home pay. We generally don’t see veterinary surgeons working for umbrella companies unless they are just doing a one off locum job and don’t want the hassle of self assessment. Anyone earning below £15 per hour would benefit more from working via an umbrella company, if you earn over that then you will take home more pay working via a limited company. Most umbrella companies offer support for setting up and running limited companies as well, and we will get to sharing a piece on setting up your own limited company soon if you want to do it yourself.
It’s also worth noting that you cannot claim expenses working via an umbrella company, there was a change in the law in April 2016, as previously travel and subsistence were allowed, nowadays you can only claim if you are able to meet the HMRC definition of a mobile worker (which you really won’t!), and if you are not subject yo supervision, direction or control. You will be able to claim reasonable expenses working as a limited company, but consider that there are costs involved setting up a limited company and even with expenses it is sometime still cheaper to look for an umbrella company.
Who is the best umbrella company and is there a difference in take home pay?
You should find that each umbrella company will make the same tax and national insurance contributions, so there really should be no difference there, you may notice a difference when they take their fee, this does vary with every company, some will take a percentage, some a fixed fee, I’d suggest to look for a company that take a percentage but also cap that amount, this way you benefit if you only work a short week, and if you work a crazy long week then any fee will be capped.
It really is up to you which company you use, and also if you want to set up a limited company, we work with plenty of them and have some favourites, if you would like to know any more about umbrella companies, would like some suggestions of companies to use, or help setting up a limited company then please get in touch.