Choosing between the private or public sector can make a big difference to a contractor’s career, determining everything from the types of contracts they will work on to whether they will fall under IR35.
To help every contractor make the best decision for them, Umbrella Supermarket has put together this handy guide outlining the key differences between the public and private sector and how each can impact a contractor’s day to day life.
There are several key differences between the public and private sectors which will have an impact on a contractor’s career.
Whereas the public sectors lies under the control of the government, the private sector is run by individuals and businesses who make a profit. This inevitably leads to several differences between the two sectors, including:
As public sector organisations have direct ties to the government, their objectives are usually driven and influenced by compulsory regulations from local, regional, national or international organisations or bodies.
Private sector bodies, however, are not subject to such regulations and therefore have more freedom and flexibility in how they operate. As they are free to set their own goals and targets they are usually financially driven and therefore their motivations typically revolve around revenue generation and profit-making.
As we’ve already touched on, as the objectives and motivations of the public and private sector differ, so too does their spending - another key difference between the two.
Whereas public sector organisations are held accountable to several parties interested in how they are spending their money and performing, private sector companies do not usually face such accountability.
The final key difference between the public and private sector is how transparent they are expected to be.
As public sector organisations are controlled by government transparency is understandably of high importance. The public sector is expected to disclose key information on what they are doing and achieving.
Private sector organisations however do not need to meet such strict standards. As private organisations and businesses, they often have the ability to hold back information if they wish.
Those are the main differences between the public and private sectors, so how does this impact contractors and the way they work?
The main difference when it comes to private vs public sector for contractors is how they will be impacted by IR35 under each route.
Currently, IR35 legislation applies exclusively to the public sector, however, this is set to change as of April 2021 when IR35 will be extended to the private sector.
IR35 legislation is in place to prevent workers such as contractors operating as so-called ‘disguised employees’. This effectively means preventing workers from offering their services in a way that allows them to pay less tax and National Insurance.
From 2017, changes in the public sector meant that it became the responsibility of the client to determine a contractor’s IR35 status, rather than the contractor themselves. This meant that it was the client’s responsibility to deduct the contractor’s tax and National Insurance contributions from the contractor’s fee before it is paid to them.
However, this harmed many contractors as it meant that thousands were deemed to be inside IR35, regardless of their actual circumstances.
This meant that some contractors ended up paying PAYE tax and National Insurance Contributions when they did not need to.
Changes that are set to come into play to IR35 legislation in April 2021 will see it rolled out to the private sector as well as the public sector. This will mean that in the private sector, the client will now also be responsible for determining the contractor’s IR35 status.
This will likely badly impact the 170,000 private sector contractors, many of whom will be wrongly deemed to be under IR35.
Many contractors are understandably worried or anxious about IR35, so how can you ensure IR35 compliance? One option is to operate under an umbrella company.
Whether you choose the public or private sector, when you work under an umbrella company you become their employee, meaning you will be exempt from IR35. That’s why umbrella companies are a hugely popular route for thousands of contractors in both the public and private sectors. Umbrella companies make contracting easy and hassle-free and take the dreaded IR35 legislation out of the equation, so contractors can get on with the contract at hand rather than worry about IR35.
Having outlined the pros and cons of working in both the public and private sectors, contractors can make a well-informed decision on the best route forward for them.
For those contractors that wish to use the services of an umbrella company, Umbrella Supermarket are here to help you find the best umbrella company. In just 60 seconds our umbrella calculator gives you a list of umbrella companies that best suit your needs and circumstances. So, whether you choose to contract in the public or private sector, you can find an umbrella company that ensures IR35 compliance and suits all your needs. Ready to see what our umbrella calculator can do for you today?
Any contractor considering switching to an umbrella company will want to know how to find the best provider to work with.
Although you could spend your precious time and energy searching the web for the best umbrella company, there is an easier way – using an umbrella calculator.
In this guide, Umbrella Supermarket explains why every contractor should use an umbrella calculator in 2021.
If you are considering contracting you will need to decide on PAYE or umbrella.
It can be a difficult decision to make and contractors will inevitably be questioning which option will be the best for them.
To help every contractor get on the right track for them, in this guide Umbrella Supermarket looks at PAYE vs umbrella, outlining the key differences and how this will impact you.
There are many reasons that contractors across the UK opt to work under an umbrella company.
Umbrella companies offer an easy way to contract and remove the need for the contractors to worry about the burdens of admin, finances, tax and IR35, all things that limited company contractors have to deal with.
For this reason, many contractors will be weighing up their options and questioning whether it is worth using an umbrella company in 2021. To help make the decision that little bit easier, Umbrella Supermarket has put together this guide on the pros and cons of using an umbrella company.
Any contractor that is considering operating through an umbrella company in 2021 will need to understand Umbrella Company fees - from why an umbrella company charges fees, how they are paid to how much the contractor will pay.
In this guide, Umbrella Supermarket answers those all-important questions to help every contractor know exactly where they stand when it comes to umbrella company fees.
If you’ve made the decision to contract through an umbrella company in 2021, you will next need to find an umbrella company that’s right for you.
After all, there are lots of umbrella companies out there, so how do you know which one to choose?
To help you find the best umbrella company for you, in this guide Umbrella Supermarket outlines what makes a good umbrella company, so you can rest assured you’re making the right move.
One of the many advantages to operating through an umbrella company for contractors is that they become an employee of their chosen provider.
In turn, this means that the contractor will be automatically enrolled onto the umbrella company’s workplace pension scheme.
To help contractors find out more about umbrella company pensions Umbrella Supermarket has put together this handy guide.
If you are considering contracting through an umbrella company you will naturally have questions and queries over how they work.
After all, making the move to umbrella can be a big step for contractors. To help, in this guide Umbrella Supermarket explains how to get started with an umbrella company and share our top tips for using one in 2021.
PAYE or umbrella is a question asked by every contractor. Which one you opt for will have a big impact on your contracting career and lifestyle. So, it's important to make the right decision for you.
To help makes things a little bit easier, Umbrella Supermarket has put together this guide on PAYE or umbrella, outlining the key differences between each, to help you make the best and most informed decision for you.
One of the many benefits to working through an umbrella company is that you will receive holiday pay as well as a range of other statutory benefits including sick pay, maternity and paternity pay.
To find out more about umbrella company holiday pay, and how to calculate how much you will be entitled to, Umbrella Supermarket has put together this handy guide.
Contractors must make several decisions throughout their contracting careers. One big decision contractors have to make is how they will operate.
One way that contractors can work is through an umbrella company.
Umbrella companies have become an increasingly popular way to contract in the past few years, offering many benefits to the contractor. But, how do you know whether this option is right for you?
To help every contractor make the right decision for them, in this guide, Umbrella Supermarket explains when not to use an umbrella company.
There are tons of benefits to using an umbrella company, which is why they have become such a popular option for contractors in recent years.
After all, an umbrella company takes away the stress and hassle of operating through a limited company whilst offering contractors a range of advantages, such as statutory rights, paying them a salary, deducting correct tax levels and National Insurance, and taking care of tasks like expense processing and invoicing.
However, as more and more contractors opt to use the services of an umbrella company, more providers have started to claim that they are HMRC approved.
To bust the myths around HMRC approved umbrella companies and get straight to the facts, in today's guide Umbrella Supermarket look at whether HMRC approved umbrella companies really exist, so you know exactly where you stand.
If you're considering making the leap to contracting, you will understandably want to know how much you will have to pay in umbrella company costs. After all, this amount comes directly out of the contractor’s pocket, so it’s important to be clued up on how much you should expect to pay.
To help contractors, in this guide Umbrella Supermarket answer the all-important question of how umbrella companies cost in 2021.
