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Are you a contractor moving to the UK? Make the most out of it!


If you are a contractor moving to the UK, you should consider the way in which your chosen contract solution will influence any additional immigration applications. There are two main types of contract solution to choose from: an umbrella company or a limited company.


One of the main advantages of the use of an umbrella company is that it eliminates the time and stress associated with creating and running a limited company. An umbrella company deals with invoicing your agency on your behalf and thereby helps you to make the most of your earnings. The majority of agencies will recommend that you use such a company. The agency may be able to provide you with a list of umbrella companies that you may wish to try. Some agencies may have commercial arrangements with these companies while others have fixed recommendation policies. When considering the use of an umbrella company, it is essential for you to ask your agency the reasons why they recommend this.


The use of an umbrella company is the ideal option when freelancers take on short-term contracts in between permanent roles. Furthermore, registering with a company is as quick and easy as leaving one. Many freelancers choose to use an umbrella company for a few months before later acquiring all the information that they need to begin to start up their own limited company.


The majority of umbrella companies are operated by qualified accountants able to offer professional guarantees. However, you should also be aware that anyone can create such a company, irrespective of their qualifications of experience. To ensure that you will be able to make the most of your earnings, it is essential deal with a trusted company.


When choosing an umbrella company, it is of course necessary to consider the costs of the service. You should expect to meet the cost of a fee of around £30 per week if you wish to receive a high quality of service. Some types of these companies charge you on a percentage basis. However, you should be prepared to negotiate this rate if you incur a high rate.


The company will pay you a net salary, minus the required contributions for tax and national insurance, through their Pay as You Earn (PAYE) system. The umbrella company will therefore handle all of the administration associated with freelance work, including your IR35. You will not find yourself in receipt of any unforeseen tax demands from Her Majesty’s Revenue and Customs (HMRC) or incur the stress of worrying about your tax bill.


As a contractor, you are granted the freedom to claim specific expenses, typically through a reimbursement of your expenses by the agency. An umbrella company will deal with the processing of these expenses on your behalf, usually without charge. HMRC are likely to take a keen interest in such schemes. Your chosen company must be able to claim expenses on your behalf and provide a full justification of these claims. This will aid you in claiming all that you are legally entitled to.

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