Moving from Umbrella to Limited

Why change?

Most accountants will advise you that working through your own Limited Company is the most tax efficient way of working. It gives you greater control and more flexibility for efficient tax planning.

How could it improve my take home pay?

If you are currently working through an Umbrella company, you’ll typically be taking home 60-65% of your contract value, compared with around 75-80% through your own Limited Company.

Furthermore, with the Flat Rate VAT Scheme, you will be able to keep a percentage of the VAT you charge to your agency/client.

For example

A £40,000 contract could be worth an extra £1,360 per year

A £50,000 contract could be worth an extra £1,700 per year

A £100,000 contract could be worth an extra £3,400 per year

Won’t my accountancy fees increase?

Not necessarily and in many cases you will make savings on the on the Flat Rate Vat Scheme. So your new improved take home pay will all end up in your pocket.

Isn’t it running a Limited company complex and time consuming?

Far from it. You can transfer to a Limited Company at any time. You don’t have to wait till the end of your contract. We can set your new company up in minutes and advise you on opening a business bank account for £1 deposit. We’ll then help you with VAT registration

What will I need to do then?

  • Fill out an expenses claim form each week/month
  • Send cheques for income tax, VAT and NI to the Inland Revenue when instructed by us
  • Pay yourself each month – by transferring money from your business account to a personal account
  • If you receive any correspondence from the Inland Revenue, just send it to us and let us take care of it

That’s it. We will look after all of your accounts so you can focus on your work.

I’m inside IR35 - Is it still worth it?

Even if you are inside IR35 you can still claim

  • Administration expenses – fixed at 5% of your contract income
  • Travel & Accommodation
  • Pension contributions
  • Professional subscriptions

In addition you can receive benefits from the flat rate VAT scheme, so from a financial perspective it may still be worth considering.

If you would like further advice on umbrella services or setting up a Limited Company please call Kerry Pickersgill on 0161 968 8100 or email

Client introductions: we offer £75 for a new Limited Company and £50 for a new Umbrella

Reilly McMordie specialise in providing accountancy services for contractors throughout the UK. Established in 1985, we have extensive experience in the industry.

Next Step:

Please contact us if you need further advice, have any questions about our services, would like a free consultation or a fixed fee quote.