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Switching from Umbrella to setting up a Limited Company

It’s quite common for Contractors to start their careers by operating through an Umbrella company as an employee. The security of continuous employment, with all the associated rights and protections, can make the leap into contracting seem much less daunting. It also simplifies the process at a time when your to-do list is probably out of control.

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However, once you’re established and you’re sure the contracting life is for you, it might be time to consider running your own limited company. There are many reasons why you might want to, including greater control over your career and finances and potentially higher earnings. 

Leaving an umbrella company is a quick and easy process, and many contractors are switching to the more tax efficient limited company model. We explain how to make this happen.

Ending your umbrella employment.

Once you’ve decided to move from Umbrella employment to running your own limited company, you’ll need to decide when best to end your employment with your umbrella company. Check if any contractual tie-in periods apply. At the very least, the umbrella company have a contract to supply your services to the agency or end client, and they’ll need you to give them as much notice as this contract requires. You might want to switch at the start of a new contract, as this often makes things easier and cleaner for you, your agency and your end client.

Once you’ve settled on a notice period and an end date for your employment, ask your umbrella to explain their P45/exit process. This should include arrangements for ensuring you’ve been paid for all the hours you worked, and processing any remaining holiday pay. Once your employment is ended, your umbrella will send you a P45. This will show your earnings and tax paid for the tax year to date. Your accountant may need this information to prepare your self-assessment tax return at the end of the tax year.

Forming your limited company.

The agency or end client will need to set up a contract with your limited company, so company formation will need to be completed before you start work. If you’re starting a new contract, you should form your company before this contract is due to start but it’s often smoother to make sure your company is formed and ready before your umbrella employment ends.

Limited company formation is a straightforward process that can usually be completed online. Orange Genie Accountancy can manage the process for you and your company will usually be formed within 24 hours. Your Orange Genie accountant will be able to offer advice on the best structure for your company and will begin talking to you about how to maximise the performance of your business and take advantage of any tax efficiencies available.

Once the process is complete.

You will find that being a director of your own limited company is slightly more work than being an umbrella employee, but once you have formed the habit of good record keeping, (perhaps ten to 15 minutes a week) and you have developed a good relationship with your Orange Genie accountant you really won’t find running your company any bother at all.

For more information about moving from Umbrella to Limited, please call 01296 468 185 or email

Why Orange Genie Accountancy?

Orange Genie Accountancy offers fixed fee accountancy packages to contractors and freelancers. Each client has unlimited access to their own dedicated approachable and friendly accountant. All Orange Genie Accountancy accountants are specialists in the contracting market, so they can give you bespoke, high quality advice.

We will always keep you informed about anything that could affect you and your company. Our relationships with our clients are extremely important to us so we'll be in touch often, whether it be face to face, over the telephone or email.

Our packages start at £75 + VAT a month for an online service. Our most popular package is £120 + VAT a month which provides you with your very own dedicated accountant as well as:

  • Unlimited accountancy support
  • Face to face meetings so we can get to know you and understand your contracting goals
  • Proactive contact
  • Director and employee payroll
  • Annual Return
  • Self-Assessment Return
  • A fully compliant service so you are safe in the knowledge that you are meeting your legal obligations

​And much more, includingaccess to wealth management advice, IR35 reviews and pensions planning. 

If you would like to appoint Orange Genie Accountancy as your accountants please either fill out our enquiry form or give one of our friendly expert accountants a call on 01296 468 185 or email

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