Following are the perks and benefits you will get if you will work for umbrella companies,
- You will be taxed as an employee, and you will pay the income tax and National Insurance Contributions from your income.
- For instance, if IR35 catches your contract work, then you have to work via your own limited company, and all of your payment will be taxed as an ‘employee’ income.
- After a deduction of 5% from the total turnover on the relevant engagements, the urge to meet the costs of a running company will be paid as a deemed salary, subjected to the tax rules as of umbrella companies.
- Moreover, if you violate the standards set by IR35, then some benefits are vastly reduced.
That’s the primary reason why mostly IR35-caught workers prefer to use an umbrella company, as Umbrella companies are IR35 Compliant, making efficient and effective use of employee taxes. Some umbrella companies are using IR35 in their marketing material to exceed their offerings.
So, in reality, all of the umbrella companies are liable to tax their employees in the same way and compete with the total fees they charge to their clients.