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You’ve done your research. Asked friends, colleagues and family about it and had varied answers from all sides of the pond (including agencies, payroll providers and possibly even the occasional stranger who you’ve had a random conversation with on the train or bus).

Many contractors take the plunge and go about setting up their limited company without realising the ‘legwork’ involved in managing it, or the costs that slowly add up in maintaining your limited entity (accountant fees, insurance to mention two).

Here are some of the recent changes that shows going Limited may not be such a good idea after all.

Pay rates fall of 5%
The HMRC are starting to get privy to the fact that a lot of limited entities are using their status ‘unfairly’ as they put it. Hence the IR35 rule came into effect which as time goes on, is starting to become more complex and easier to get caught out by.

After the April 2016 dividend tax changes came in, contractors netting a 75% take home rate are more likely now looking at 70% of gross.

No privacy for limited companies
As humans, we have a natural tendency to keep some matters private and confidential, especially when it comes to the world of business and work. So with the government announcement that all limited companies will need to be registered on Companies House Beta, the likelihood that your competitors and colleagues can see your financial situation has become open game. This could lead to all sorts of problems such as identity theft, agencies completing unofficial financial due diligence on you and your company, and delays in filing leading to questions about your suitability for roles and projects.

Recent announcements (August 2016) have also put limited companies under even more pressure, with all entities having to provide data to the HMRC throughout the year, digitally. So for a limited company, that means punching in figures every quarter on HMRC’s site as well as possibly having to invest in software and infrastructure to keep this all up to date. A recent poll done by an accounting firm showed that almost 43% of small businesses didn’t even know about it!

Expenses changes in 2017
You guessed it – limited companies are being targeted in the way they can process expenses. Similar to what they’ve done to contractors going through umbrellas in 2016, the HMRC are expected to use a variant of ‘supervision, direction and control’ (in other words, enforcement) to redefine IR35, meaning that many limited company workers will have the same restrictions applied to them in 2017.

Public Sector to discard limited companies in 2017
More bad news (let’s be honest, when it comes to HMRC there hasn’t really been any good news). Starting in 2017, the government are planning to stop contractors from using their limited company (PSC) when on contracts and assignments in the public sector. The fierce debate is ongoing and the government are currently in a consultation period but we’re willing to bet that come 2017, this becomes regulation rather than speculation.

What’s the alternative?
Okay, this is where you’re expecting us to come out with all this spiel on how we are better than everyone else, we can offer everything under the sun like all umbrellas do at the moment.

Guess what? We’re not an umbrella company. We don’t operate like one either.

What we do is different – we get you a better pay rate through a model that’s a bit like a worker cooperative, so it pays you a bonus (should your contractual arrangements permit). That means you’re not standing alone as you would be if you were a limited company and not ‘another number’, like umbrellas see their customers. We’re 100% legitimate (in case you’re wondering) and 100% HMRC compliant.

Want to know more? Here’s your options (because we like giving you choices)

  • Use the contact us form on our homepage and select a time to have a chat when it suits you.
  • Fill in our pay illustration and get an (almost instant) accurate figure back of what kind of pay you would take home if you were with Appytech.

Posted in Knowledge, Limited, Umbrella On August 24, 2016