Umbrella Vs Limited

Umbrella PAYE

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• Umbrella PAYE is a type of employment model where a third-party company (the "umbrella company") acts as an employer for temporary workers or contractors.

• Under this model, the umbrella company takes care of all administrative tasks related to employment, such as payroll processing, tax deductions, and National Insurance contributions.

• The workers are then paid by the umbrella company through PAYE (Pay As You Earn), a system used by HM Revenue and Customs (HMRC) in the UK to collect income tax and National Insurance contributions from employees' pay.

• The umbrella company charges a fee for their services, which is typically a percentage of the worker's income.

 

 

Limited Company

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• A limited company is a type of business structure where the company is a separate legal entity from its owners, which means the owners (also known as shareholders) have limited liability for the company's debts and obligations.

• A limited company can be set up by an individual or group of individuals, who become the shareholders of the company.

• Under this model, the limited company is responsible for its own administrative tasks, such as payroll processing, tax deductions, and National Insurance contributions.

• The workers or contractors are hired by the limited company, and they are paid directly by the company as a salary or dividends.

• The limited company can also provide services to other clients, which can create additional income streams.

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