Trying to decide between an Umbrella Company and having my own LTd Company? Which is better?

Question

A friend I know works as a contractor in the UK. Currently they are working for a private company, through an employment agency, but have a LTd. Company set up for them through an umbrella company (FPS Umbrella).

My friend and I are both here in the UK on working holiday visa's and I am about to start working. I am just trying to figure out if I should rather set up my own LTd. Company for the purposes of reducing the overall tax I would pay. Some people claim this is a better option even if you have to do all the tax payments yourself under the guidance of an accountant.

Which is the best way to go?

Answer 1

A lot of agencies will not work via an umbrella co.

Answer 2

If you are on a working holiday visa make sure you comply with the conditions of the visa and do not violate them. The advice I have received in regarding to this same question for the UK is if you are going to do this 1 year or less then an umbrella company will be better. However if you are going to do it for the long-term then a limited company is the best option.  

Answer 3

Seems rather a palaver for a holiday job..... exactly how much were you expecting to earn between now and next April ?

You could end up paying for and maintaining a company to save you tax you wouldn't have paid anyway. Putting it through a company doesn't make it tax free you know, there may be benefits doing it that way, but depends how much you earn, how you want to get at your money etc etc etc.

And I don't know one way or the other.... but I'd check the conditions of a holiday working visa before you start incorporating companies in case you invalidate your right to work.