What are the benefits of using an umbrella company?

You may be thinking of becoming a contractor or freelancer and have heard of umbrella companies, and be wondering what they are and what benefits they can provide you. There are a number of benefits and these are outlined below.

• When you sign up to an umbrella company it is normally a quick and easy process, and the same goes for if you want to leave. As long as you ensure you do not get signed up to any long term monthly contracts. Most reputable umbrella companies will only charge you a fee if you are working and submitting timesheets, if you are not working then you will not pay anything.
• For those just starting out as a contractor or freelancer, or those that do short term contracts between permanent job roles an umbrella company is an ideal solution. If at some later stage you decide to start your own limited company you can do.
• An added benefit along with having the freedom of being a contractor, is that if you join an umbrella company you enjoy your full statutory employment rights. This means that if you are off for any reason you can claim your full benefits, which include maternity, paternity, sick and holiday pay.
• The amount of paperwork and administration you need to do when working through an umbrella company is minimal. For most umbrella companies you only need to submit your timesheet online once you have done the work. Once this has been submitted the umbrella company will handle all the administration on your behalf, which includes the invoicing and collecting of the money from your client or agency and payment of tax and NI contributions to HMRC, all at no extra cost.
• The umbrella company will deal with all your tax affairs and so you can be safe in the knowledge that you will be legal and tax compliant. You will not need to worry about having to figure out your taxes or pay an accountant an additional fee to do it for you.
• As a contractor you may be required to hold Professional Indemnity Insurance, Public Liability Insurance and Employer Liability Insurance. A number of umbrella companies will include these covers at no additional cost.
• You are permitted by the HMRC to claim back certain expenses. An umbrella company will process these expenses for you and all that you need to do is keep all the relevant receipts and pass these on.

If you do find yourself in the situation where you start freelancing, you should consider the services of a reputable umbrella company to handle your affairs, so you concentrate on providing a professional service to your clients.

IFAs Professional Indemnity Insurance Premiums could rocket

With the Court of Appeals ruling revoking the right of trustees to undo poor tax decisions, a surge in claims from people seeking to sue their adviser could mean a rise in insurance premiums for IFAs.
One legal expert said that trustees could no longer use the Hastings Base rule, which gave them protection and allowed them to go to court and admit they made a mistake but did not realise the financial consequences.
The Court of Appeal has ruled that is wrong for HMRC to lose out on revenue due to poor decisions, provided that the trustees had sought professional advice.
This ruling means that now a trustee will be in the same position as an individual, and cannot reverse the decision as long as they have taken professional advice. This could lead them to suing their advisor.

The ruling he warned could lead to higher premiums for IFAs for their professional indemnity insurance, as the more claims there are then the higher the premiums will be as is the case for other insurances such as car insurance.