Many contractors in the UK can use some help when it comes to reducing their tax bills and cutting down on their administrative costs but that help is available once they know where to look. A single, self-employed contractor cannot benefit as much, financially, as a limited company can and so many contractors decide to become a limited company so as to be able to make significant claims for expenses on their tax returns. Although this is a good idea as a contractor certainly could make a substantial number of extra claims as a limited company than they could merely as a self-employed contractor, being a limited company brings with it additional administrative tasks to the ones the contractor already has and that is not something that most contractors relish. On the other hand though, by becoming part of an umbrella company, a contractor can still enjoy almost as many expenses but without the added administrative burdens. Once a contractor joins an umbrella company for an agreed fee, that Umbrella Company will then list the contractor as being one of their employees which allows for more expenses to be claimed. Instead of increasing the number of administrative tasks a contractor has to undertake, being part of an umbrella company actual reduces the number of administrative tasks a contractor has to stress themselves over. As part of the umbrella company, it will be the umbrella company’s responsibility to pay the contractor’s workers and so all the contractor has to do themselves, is provide the umbrella company with any and all weekly timesheets for its workers.
It is also the umbrella company which will create all the invoices on behalf of the contractor and therefore of course collect the payments on those invoices. For this reason, as well as providing the umbrella company weekly timesheets, the contractor will also have to provide them with their banking details so the umbrella company can place the money from those invoices, into their bank account. Although an agreed fee will be decided on between the contractor and the umbrella company prior to the arrangement being made, those fees will be considerably less than the contractor would have had to pay in taxes were they not able to claim expenses. There is never usually a problem with payments between the contractor and the umbrella company as it is normal for the umbrella company to take out their fee from the money they collect on the invoices, before paying the remainder into the contractor’s bank. Any fees the contractor does take though, along with any other financial paperwork will of course be maintained in an appropriate manner and be available for the contractor or auditors if necessary to see. To find an appropriate umbrella company in the UK, a contractor simply has to go to the website for Umbrellacompany.uk.com where they will easily be able to find one that suits their needs. Although umbrella companies may seem too good to be true, they are recognized by the UK taxation regulations.