On the 1st October 2011 the Agency Worker Regulations (AWR) came into force. The AWR essentially regulate the working conditions of temporary workers by ensuring that they receive the same pay, working hours, and holiday allowances as regular employees. In order to qualify for these benefits, the agency worker must be employed for 12 weeks or more regardless of the number of hours they work each week.
Those affected by the legislation are typically as follows:
Temporary work agencies (TWA) – these are companies that are involved in the supply of temporary workers.
Agency worker – these are individuals who work as temporary agency staff
Hirers – these are the end client for whom the agency workers assignment is based
Limited company contractors generally do not need to worry about the AWR legislation. This is of course unless they make the decision to work under an Umbrella provider at some point in the future.
AWR and Umbrella
If you are working as an Umbrella employee then you may wish to consider setting up a Ltd company instead. If you can demonstrate that you do not need to work under the direct supervision of your client then you may be outside the scope of AWR. If this is the case and your earnings are above a certain threshold operating as a Ltd company could prove to be a more tax efficient approach for you. If you are unsure and which approach would suit you best we would be happy to discuss your personal circumstances with you and offer guidance to help you reach a decision that is right for you.
Benefits of Going Limited
More and more contractors are making the decision to operate through a limited company due to the increased flexibility, security and tax efficiency that they bring.
Limited companies are classed as separate legal entities to the shareholders who own them. The profits generated through the company are owned by the company, until they are drawn by the shareholders as either a salary or a dividend.
There are many advantages to operating through a limited company as a contractor. As well as the security that limited liability brings the profits can be extracted as dividends, which can save thousands of pounds in national insurance contributions compared to PAYE employment.
Exchequer Accountancy Services can set up and have you running as a limited company in no time at all. Call one of the team on 033 3323 1199 and we will do the rest for you.
For more information on running a limited company please refer to ‘Exchequer Accountancy Services guide to running and managing a limited company’.
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