How to choose a compliant umbrella company
Editor | 26 March 2021
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Stricter IR35 rules mean that many limited company contractors are looking to switch to an umbrella working model.

Joining an umbrella company means that you pay tax at the same level as an ‘inside IR35’ limited company contractor, while also benefiting from holiday and sick pay entitlement.

When you choose an umbrella company, it’s imperative that you choose a compliant provider. Not doing your research at an early stage could cost you in the long run.

Umbrella compliance has hit headlines recently after HMRC warned contractors about a number of schemes offering higher than average rates of take home pay.

IR35 for tech contractors: What you need to know

Highly skilled contractors working in software development, IT project management and many other roles in technology are among those most at risk from changes to IR35 rules.

 

Although these roles tend to be well paid, the contracts are often structured in a way that means they fall ‘inside IR35’.

In this brief guide, we aim to answer the most important questions about IR35 to help you better understand the rules, how they might be applied and how you can avoid paying more in tax.

Budget 2021: End of the road for inside IR35 contractors

A small cohort of limited company contractors had been holding onto hope that the Chancellor would use his recent Budget statement to once again delay a set of damaging IR35 reforms.

IR35 changes were originally due to be implemented in April 2020, but coronavirus-related disruption pushed the reforms back until April 6 2021.

Chancellor eyes limited company tax increase

The Chancellor Rishi Sunak is thought to be considering a sharp increase in the rate of corporation tax, as the Treasury attempts to curb borrowing in the wake of the coronavirus pandemic.

Reports suggest that the tax, which is paid on the profits of limited companies, could gradually increase from 19% to as much as 25% by the end of the current parliamentary term.