Advice needed on change in job role.

[bill.mc]

Hi,
I am posting this up as my partner (bill.mc) wife used to do his book work, now I am having to learn to do it. Could anyone help me with the following questions?
He is a freelance truck driver and has been a sole trader for 9 years. What used to happen is, his wife would invoice companies and agencies and they would pay us via cheque or BACS. Now the agencies say that we can no longer just invoice them, we have to be either a limited company, vat registered, PAYE or go under an “umbrella” company.
The problem I have is this: People keep telling me he is financially better off under an “umbrella” company than PAYE but he would be alot worse off under an umbrella company than being a sole trader. So would he be better off as a sole trader with an established 9 year company going VAT registered, although he does not earn the threshold of £64,000
The other problem/dilemma is the umbrella companies pay direct into an account of his choice (personal or savings) but if he was to pay the money into his sole trader business account would he be taxed etc again?
Thank you in advance for any help.
Regards
Leah

[Poldenacc]

Leah,

Paying the money into his sole trader account does not mean that it will be taxed again, he would need to ensure that it isn't included in the calculation of sole trader income.

The decision to trade through a limited co, sole trader or umbrella company is really dependant on the specific situation of the individual. Most umbrella companies charge a management fee - the level of this fee differs between companies. Umbrella companies essentially treat him as an employee which will affect the expenses he can deduct.

He could voluntarily register for VAT as his income is below the compulsory threshold, but this decision should not be taken lightly as it does create additional returns.

I would suggest you arrange a meeting with an accountant to talk through the specific situation they would be able to provide tailored advice to your partner.

Karen