There are many reasons why you may decide you would like to switch umbrella companies. Please read our latest article as we outline why contractors make the switch, what you need to do to switch umbrella companies and what to look out for when choosing a new umbrella company.
Why switch umbrella companies?
There are several reasons why you may be considering changing your umbrella company. We’ve summarised some key reasons why contractors often switch umbrella companies.
1. Misleading take home pay illustrations
Before registering with an umbrella company, you may have requested a few take home pay illustrations to compare your net take home between providers. Some sneaky umbrella companies will adjust the number of working weeks used in the calculation or use a different tax code in your illustration to produce a more favourable net take home pay figure. All compliant umbrella companies must make the same tax deductions set by HMRC. It is important to understand an umbrella company take home pay illustration to spot unethical umbrella companies trying to trick you into using their service. If your first payment is drastically different from the take home pay illustration you received, the umbrella company might not have provided you with an accurate calculation.
2. Bad customer service
Does your umbrella company offer you comprehensive support? Can you get in touch with them quickly and speak to a member of the customer service team when you need to? Or perhaps you have received inaccurate or late payments, and your queries have not been dealt with. Fortunately, there are hundreds of alternative umbrella companies out there that will meet your requirements.
3. An overpriced margin
Most compliant umbrella companies will only retain the margin they charge for the services they provide and will outline any costs for additional services during the registration process. You can usually expect to see umbrella companies advertising a margin of between £15 – £35 per week. Many contractors will switch umbrella companies as they can get better value for money with a different provider. However, it is worth considering the level of customer service you will receive. Just because an umbrella company is £5 more than another company, you may receive exceptional customer service, and it’ll be worth paying an additional £5.
4. Additional service requirements
Ultimately, umbrella companies exist to provide contractors with a compliant way of getting back for contracts deemed inside IR35. Aside from statutory benefits, not all umbrella companies offer additional services for their workers. If you require other services, such as salary sacrifice or specific insurances, always check with your chosen provider before registering that this is something they can accommodate.
Switching umbrella companies because of a recruitment agency PSL
If you change recruitment agencies, they may provide you with a list of umbrella companies, often referred to as a Preferred Supplier List (PSL) or Approved Supplier List (ASL). It is important to note that these are suggestions, and a recruitment agency cannot legally dictate nor mandate which company you use for your payroll. Providing an umbrella company can prove they are operating lawfully and in a compliant manner, there is no reason the recruitment agency should reject your request to use a provider not on their PSL or ASL.
However, suppose your new recruitment agency does not want to work with a particular umbrella company. In that case, it may be because they have a good reason not to and are doing so to protect their temporary workers. Many recruitment agencies will only include umbrella companies that have achieved FCSA certification on their PSL/ASL. Using an FCSA accredited umbrella company will give you complete peace of mind that the umbrella company is processing your pay compliantly and making the correct tax deductions per UK tax law. Whether your agency has provided you with their PSL or ASL or asked you to find an umbrella company, it is essential to do your research and ensure you only use credible and legitimate companies.
Choosing your new umbrella company
When choosing an umbrella company, we recommend looking for providers that have achieved FCSA accreditation. Why use FCSA
Once you have found some accredited providers, we suggest finding out what benefits are included as part of the service. Do they operate same-day faster payments or an online portal to submit your timesheets? Most umbrella companies will provide a host of benefits, and finding a company that aligns with what you require is crucial.
Depending on your situation, it is advisable to check your pension options. Provided you are below state pension age, the umbrella company will automatically enrol you into a workplace pension scheme. If you want to make contributions, ask the umbrella which workplace pension scheme you will be enrolled into. If you would like to contribute to your own pension instead, ask if they offer a salary sacrifice service.
Finally, once you’ve narrowed down your search, we recommend you check the umbrella company’s reviews on Google and Trustpilot. This will give you a good insight into the customer service level and how quickly and efficiently they solve customer queries.
Notify your current umbrella company of your intention to leave
The first step is to notify your current umbrella company that you no longer require their services and request your P45. Failure to request your P45 may result in you being overtaxed, as HMRC will think you have two employers (your old and new umbrella companies).
You must also notify your recruitment agency of your intention to switch umbrella companies. They will also need to sign an overarching agreement with your new umbrella company and exchange payroll information.
Registering with your new umbrella company
You will need to follow several steps when registering with your new umbrella company. You will need to provide your new umbrella company with details about your contract, the name of your recruitment agency or end client and their contact information and your personal details.
If you have received your P45, you will need to send a copy of this to your new umbrella company. Don’t worry – if you haven’t yet received it and are due to start a new assignment, you can complete a Starter Checklist for PAYE and provide your P45 once you have received it.
You will also need to provide proof of your identity and right to work in the UK and read and sign the umbrella company’s employment contract.
Contact us today for a tailored take home pay illustration
If you are interested in finding out more about our service or would like to request a tailored take home pay illustration, please call our expert team on 01707 669023. You can also request a callback for a more suitable time, and one of our consultants will be in touch.
We look forward to discussing your payroll options with you!
