Payment options
Fuel Recruitment is able to make payments to contractors via the following methods: limited company and PAYE through an umbrella company.
Limited Company
The majority of long-term contractors choose to set up their own Limited Company, which puts them in the role of Director/Shareholder. As well as setting up the company itself, contractors are also required to open a separate business account, arrange insurance and issue invoices to the end client (or agency).
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Advantages |
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Disadvantages |
| Greater opportunity for tax planning and the potential to be more tax-efficient | A Ltd Company Director has responsibility for all legal and tax obligations (e.g. filing accounts with Companies House and payment of Corporations Tax) | |
| Contractors can claim a wider range of business expenses | More day to day admin and paperwork | |
| Complete control of all transactions and financial affairs | Not ideal for contracts worth less than £25k per year, or for those considering a return to permanent employment | |
| Additional costs involved e.g. hiring an accountant, arranging insurance |
PAYE through an Umbrella company
In this case the contractor essentially becomes a PAYE employee of the Umbrella Company and submits their timesheets; the umbrella company then invoices the end client (or agency) and pays the contractor, minus their services fee.
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Advantages |
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Disadvantages |
| Time saving and simple; the only requirement from the contractor is to submit timesheets and expenses on time. | All Umbrella companies charge a fee, and the amount can vary hugely from company to company | |
| No tax issues to consider as PAYE tax and NICare deducted. | Contractors are reliant on the Umbrella to collect their money from the client and repay it to them | |
| Ideal for short-term contracts, those earning less than £25k or for those wanting to keep the option open of returning to permanent positions open. | ||
| Allowances to offset basic expenses against your tax |
Our consultants are always on hand to offer support to contractors or anyone considering moving into contracting, but we don’t provide financial or legal advice to our contractors. There are many excellent lawyers and accountants who specialise in contracting issues who can discuss your options with you in more detail.Whatever option you choose, our dedicated back office team will ensure that you are always paid in a timely and efficient manner.
If you have any questions about how we pay our contractors, don’t hesitate to call us on 01926 487487 or email info@fuelrecruitment.co.uk.
For further reading on these topics we recommend the following sites:
www.businesslink.gov.uk
www.hmrc.gov.uk/businesses
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