If you are new to contracting or have only ever contracted via a limited company, you may wonder: “What is an umbrella company?”. An umbrella company is a business often used by recruitment agencies or end clients to pay temporary workers. Our latest article outlines what an umbrella company is, who can use an umbrella company and the benefits of using an umbrella company for your temporary assignments.
What is an umbrella company?
Umbrella companies employ temporary workers and act as intermediaries between a contractor and the end hirer or recruitment agency. They process the payroll of temporary workers (PAYE) and are responsible for deducting the correct tax and National Insurance Contributions (NICs) – which are sent to HMRC. Although the umbrella company is your employer and will process the payroll for your assignments, you will complete the work for the end client. Using an umbrella company is actually really straightforward and generally regarded as the easiest way to get paid if you’re a temporary worker.
Who can use an umbrella company for their payroll?
As a temporary worker, the most popular ways to operate are becoming a limited company director or registering with an umbrella company. Ultimately, your IR35 status will determine the best route for you. For example, if you are outside IR35, setting up a limited company offers a more tax-efficient way to operate. However, if you are inside IR35, you may be better suited to using an umbrella company for your payroll.
Umbrella Company UK offers a compliant and reliable PAYE service to contractors and freelancers in any industry and is often used by:
- Contractors deemed inside IR35 in the public or private sectors
- Contractors who are working on multiple assignments alongside each other who would benefit from continuity of employment
- Contractors working on short-term assignments
- Contractors who do not want the responsibility of setting up and managing their own limited company
- Individuals who want to try out contract work
If you are unsure whether an umbrella company is the right option for you, please call our Sales Consultants on 01707 669023.
What are the benefits of using an umbrella company?
There are many benefits of using an umbrella company for your payroll:
- Compliance with UK tax law and HMRC legislation – Providing you use a compliant umbrella company, the correct tax deductions (Income Tax and National Insurance) will be made to your pay and sent to HMRC on your behalf.
- Continuity of employment – Your umbrella company will remain your sole employer, allowing you to work for multiple clients without negatively affecting your tax code. Continuity of employment also helps when you apply for financial services such as a mortgage or loan.
- Inside IR35 status determination – If you are deemed inside IR35, you do not need to worry about IR35 as you’ll be taxed at source, like a permanent employee (PAYE).
- Employee benefits – You’ll have access to employee benefits, including Sick Pay, Maternity Pay and Paternity Pay, just like a permanent employee.
- Low cost – Umbrella companies will deduct a margin for their service, which is taken from your gross pay (before tax). A weekly umbrella margin is usually between £15 – £30.
- Insurance—Most compliant umbrella companies will provide comprehensive, free insurance cover (Public Liability, Professional Indemnity, and Employer’s Liability Insurance) as part of the service.
- Minimal administration—Unlike a limited company, umbrella companies offer a straightforward way to get paid, and there is very little ongoing registration.
What are the benefits of using Umbrella Company UK?
Umbrella Company UK is an FCSA-accredited and SafeRec-certified umbrella company that helps hundreds of contractors and freelancers get paid compliantly every week. Having passed the strict assessment and auditing process, we’ve proven that we operate ethically and in accordance with HMRC regulations and UK tax law.
We are also certified by SafeRec – payroll auditing software powered by AI. Every time Umbrella Company UK processes a payslip, SafeRec conducts a thorough payslip audit and cross-references it with the RTI sent to HMRC. The audit checks that workers are being paid compliantly and that there are no signs of malpractice. As an Umbrella Company UK employee, you will be sent a payslip audit report every time you are paid, which you can check to make sure payments are ethical and deductions are legal.
If you are looking for a compliant umbrella company, look no further. As part of our umbrella service, you can benefit from the following:
- Ongoing support from our Onboarding and Customer Service Team
- Same Day Faster Payments
- Access to My Digital, our umbrella payroll app
- Minimal ongoing administration
- £25 million insurance cover
- Employee benefits such as Sick Pay and Maternity/Paternity Pay
- There is no tie-in period and absolutely no hidden costs
- Salary sacrifice service – click here to find out more
Registering with Umbrella Company UK is easy, and we’re here to support you every step of the way. To get started, please call our friendly Sales Consultants on 01707 669023.
Contact us today for a free and tailored take-home pay illustration
If you want to find out how much your take-home pay could be for a temporary assignment or would like more information about our umbrella service, please call 01707 669023. Our expert Sales Consultants can provide a tailored take-home pay illustration and talk you through how it works when registering with an umbrella company.
