They dont want the risk of paying freelancers from the tax and NI point of view, they dont want any risk of being liable for tax and NI, so if they pay a company this is deducted before it comes to the employee - e.g. me or you. They have an umbrella company who take the money for you, you are an employee of them temporarily, they take the NI and tax off and also 5% off your rate. From a client point of view (the people you work for) they then have to pay people 4 business 10% on top of your fee plus VAT (which i dont charge) and then this 5%. The umbrella company also let you claim £2 per week expenses, mine are about £150 per month so it wasnt viable for me.
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