Choosing an umbrella company can often seem daunting. There’s a lot of information online and hundreds of umbrella companies to choose from. Given that all compliant umbrella companies will pay you roughly the same (give or take a few pounds depending on their margin), how do you choose between them? We’ve identified 8 key pieces of advice that you should take into consideration when deciding which umbrella is the best for your circumstances.
Compliance with legislation
Compliance with UK tax law is of paramount importance. There are some unscrupulous providers on the market who are promising contractors’ high rates of take home pay with the assurance that their salary will be processed compliantly. Unfortunately, this is not the case. HMRC is stepping up their efforts in tackling tax avoidance and have recently issued a warning about the use of marketed tax avoidance schemes and mini umbrella companies (MUC).
Using an umbrella company that operates in a compliant and ethical manner is vital to ensure they are paying the correct amount of tax and National Insurance Contributions (NICs) to HMRC on your behalf. And, compliant umbrella companies will ensure you’re covered by employment rights.
They have earnt FCSA accreditation
The easiest way to look for a compliant umbrella company is to look for the FCSA accreditation. The FCSA is the most widely recognised industry standard for compliance for umbrella companies in the UK. To achieve the accreditation, umbrella companies must pass a strict audit and assessment of their internal procedures by independent legal and accountancy professionals. Using an FCSA accredited company will ensure the proper due diligence has been done, and the umbrella companies’ processes are legal and safe to use.
Look for an established umbrella company
This may seem an obvious choice, but it is easier to look into a company that has been around for years than one that has sprung up overnight. Established companies are more likely to have built up a good reputation within the industry. They will have a good understanding of contractors, how they operate, and the service they need to provide. They will also have lots of information online which you can use to research the company. For example, information on Companies House, blogs and contractor reviews will all help you get a feel for an umbrella company.
They are knowledgeable about the contractor industry
There is a lot of legislation in the contractor industry that you need to be aware of and comply with to avoid getting in trouble with HMRC. Arguably, the most important one is the off-payroll legislation. A knowledgeable contractor accountant or umbrella company will know this legislation inside out and will be able to advise you on your payroll options.
They are transparent about the deductions that will be made to your pay
Unlike contracting through a limited company or permanent employment, there are additional deductions you will see on an umbrella company payslip. A good umbrella company will explain these to you in detail and will conduct an accurate take home pay illustration for you – before you sign up (should you decide to).
Umbrella Company UK believes in complete transparency and can provide you with a tailored take home pay projection which lists all the deductions you can expect to see once you register. Frustratingly, it’s been bought to our attention that some umbrella companies are deliberately offering their contractors inflated take home pay projections – just to try and trick them into signing up with their service. You can be assured that Umbrella Company UK will not do this. Instead, we’ll give you the most accurate take home pay projection we can.
Are there any additional charges?
Compliant umbrella companies only retain a margin, and this is their only source of income. However, before registering with an umbrella company, it is worth asking if there are any additional charges that you need to be aware of. For example, some companies may charge extra for leaving their service, and others may have additional “extras” that they automatically opt you in for. Be careful!
Are they user friendly?
Is their website simple and straightforward to use? Are they contactable via phone and email? Are the staff friendly and informative? Do their processes sound easy to use? These are all questions to consider when deciding which umbrella to use.
Are they on a Preferred Supplier List?
A good indication of a reliable umbrella company is whether or not they appear on a recruitment agency’s Preferred Supplier List’s (PSL). Agencies will only include umbrella companies on their PSL that have passed their audit and compliance checks. Interestingly, we’re finding that more and more recruitment agencies will only allow FCSA accredited accountants, umbrellas and CIS payroll providers on their PSL’s.
Are you looking for a compliant umbrella company?
If you are looking for a trustworthy umbrella company –look no further than Umbrella Company UK. We are backed by professionals with over 20 years’ experience in the contractor payroll industry. Our compliance with HMRC regulations is second to none, and we are proud to have achieved the prestigious FCSA accreditation.