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Should I leave my umbrella company?

Last updated on Wednesday, December 16, 2015

Written by Alex Cadman

The removal of Travel and Subsistence in the Autumn Statement has led many contractors to question their payroll solution, with many asking: should I leave my umbrella company?

With so many contractors looking at leaving their umbrella companies, we take a look at the reasons why they are doing so.

Travel and Subsistence:

George Osborne has declared the end of Travel and Subsistence claims for umbrella company contractors. From 6th April 2016, contractors working through an umbrella company will no longer be able to claim Travel and Subsistence expenses and the tax relief associated with them.

This means a contractor earning £4000 a month will be £295.32 worse off each month without the ability to claim expenses. However, a limited company, outside IR35, is able to claim these and other work related expenses. So, why would you stay with an umbrella company?

Hidden fees:

It has been widely reported in the news that some umbrella companies are charging hidden fees and disguising them as legitimate deductions. Many contractors are not aware that hundreds of pounds of their money is being deducted by the umbrella company.

You need to consider the credibility of using an umbrella company and how this could impact your finances. Your money is too important to leave in the hands of unreliable companies. Does using an umbrella company still have the same appeal when it is so risky?

There are even more downsides to using an umbrella company which you can find here limited vs umbrella.

What should I do next?

If you would like complete control of your finances, rather than trusting an umbrella company, then there is an alternative for you.

The best option to consider if you are looking for security, reliability and compliance is a limited company. With this, you are able to set up your own contractor business which could benefit from:

  • Claiming Travel and Subsistence along with other expenses
  • Control over your money. You see what you earn in your business bank account
  • Potential access to the Flat Rate Scheme
  • Flexibility for tax planning for your future
  • The most tax efficient way to legally maximise your pay

To illustrate how operating through a limited company can maximise your take home pay, we have generated a take home pay calculation using our handy take home pay calculator:

Take Home Pay

*Subject to Higher Rate Tax

If you would like your own take home pay calculation, you may call us at 01707 817410 or request a calculation.

Umbrella vs. Limited

Weighing up the pros and cons of an umbrella company against a limited company makes it easy to see that the latter is the more lucrative alternative. Plus you’ll find it to be the safest option for securely growing your hard earned income.

So can you afford not to re-evaluate your current arrangements and find out how you can improve them?

Churchill Knight can provide expert advice on the best options for you. We do so because our qualified accountants and expert consultants want to provide you with a service that works for you and is tailored to your requirements.

The world of contracting has been turbulent lately, with the Chancellor and HMRC working hard to ensure that contractors and contractor service providers stay compliant.

How we can help:

It is more crucial than ever for contractors and freelancers to choose an accountancy provider that gives security, expertise, and compliance.

With Churchill Knight & Associates Ltd, a limited company payroll solution provides the following services:

  • No minimum tie in
  • Free set-up/close-down of the company
  • Set up of limited company within 24 hours
  • Invoicing, payroll & and bookkeeping
  • Processed expenses and full administrative support
  • Instant access to your advised take home pay figure
  • Secure and efficient Client Web Portal for submitting expenses claims and timesheets

Call us on 01707 817410 or request a call back from Churchill Knight to discuss your options and find out how you will benefit when you switch to a limited company.


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