Differences between PAYE Umbrella and Limited Companies

March 21st 2015

PAYE Umbrella brief explanation;
- The contractor becomes an employee of the umbrella company
- The contractor submits time sheets
- The umbrella invoice the end client or agency
- The contractor is paid as a PAYE employee

Limited Company brief explanation;
- First you need to establish a Limited company
- Second you will need to open a company bank account
- The company invoices end client or agency and receives funds into company bank account
- The company pays the contractor, usually by a combination of salary and dividends

Each option has its own advantages and disadvantages.  For example the umbrella solution is much simpler to use and how much you pay is based on the level of pay received.  Whereas a Limited company option is initially more expensive and is overall more complex with regards to running and paperwork, but does offer a higher degree of control and can be financially beneficial where the contracts are more permanent and bring a higher level of salary.

If you are contracting or thinking of contracting and are not sure whether it is better to go through an umbrella payroll or to set up your own limited company, here at Chesterfield we are more than happy to discuss your specific circumstances and advise on the best possible option to suit your needs for further information please contact us by following the link below or call us on our offices 

Telephone Number: 44 20 7097 1385