Information about the key differences in being paid via umbrella company vs LTD company
LTD and Umbrella are very different payment modalities - we've summarised the key differences below:
If you choose to join an umbrella company, the umbrella will become your employer. We'll deduct umbrella PAYE. This means we deduct all tax and NI at source, and report this to HMRC. We also retain a small margin to cover our costs. You can be paid through an umbrella company whether your contract is inside or outside IR35, the same deductions will be applied irrespective of the IR35 status.
If you're working on an outside IR35 contract and would like to paid via your own LTD company, we can help. Our sister company Nasa Consulting has been supporting LTD company contractors since 2006! We offer a range of services to suit a variety of needs - whether you need help with incorporating a new company or assistance managing an existing one, we're happy to assist.
Please visit our information page about our accountancy services here for further details
| LTD company | Umbrella company |
| Suitable for outside IR35 contracts, where you expect to contract for at least 6 months. | Can be utilised for contracts both inside and outside IR35. Flexible with no minimum or maximum term. |
| Director Shareholder and Employee of your LTD company | Employed by Nasa Umbrella |
| Mixture of salary and dividend payments drawn, which are highly tax efficient. | Umbrella PAYE - all tax and NI deducted at source and reported to HMRC. |
| Self assessment required along with other reporting. Greater administrative burden. | Self assessment not required unless PAYE income exceeds £150k* |
| Usually requires company business insurance cover (depending on requirements of the client and nature of the role). | Insurances covered as standard - £5m PI & PL, £10m Employer's Liability |
| Employee and director of own company, therefore responsible for keeping own records for references etc. Eligible for some statutory benefits depending on the criteria. | Continuous employment and overarching employment contract with full statutory benefits plus exclusive employee rewards. References and proof of earnings information available on request. |
| Legitimate business expenses can be claimed. | No tax relief expenses are claimable via Umbrella. |
| Business bank account required for payments | Payments made into personal bank account |
| Contract paperwork issued directly to LTD company. | Agency contract paperwork arranged by and issued to Umbrella company on behalf of contractor. |
Still got questions? No problem! Our friendly onboarding team are happy to help, so get in touch:
Give us a call on 0117 929 7683(1) ☎️
Email us - sales@nasagroup.co.uk ✉️