IR35 Umbrella Company

If you are inside IR35 legislation, using an umbrella company is likely to be the best option for your payroll. This is because if you are inside IR35, you are expected to receive PAYE – the same as if you were working in a permanent role.

Our short guide below will explain what IR35 is and whether or not you should use an umbrella company for your payroll.

IR35 is tax legislation that was introduced by HMRC in 2000. Its focus is to stop tax avoidance by professionals supplying their services via an intermediary, such as a personal service company (limited company).

In simple terms, if you are genuinely self-employed in the eyes of HMRC, you are likely to be considered “outside IR35” and this will allow you to take advantage of some tax and National Insurance Contributions (NICs) savings. If you are considered as “inside IR35”, you are expected to pay the same tax and NICs as somebody who is in full time employment. Therefore, if you are inside IR35, using an umbrella company and receiving PAYE is probably your best payroll option.

If your recruitment agency or your end client require you to be paid through an umbrella company, your IR35 status is irrelevant because you will receive PAYE – just like somebody in a full-time position. The umbrella company will make deductions to your salary, including tax, NICs, the Apprenticeship Levy and their margin. You will then receive your salary and a payslip.

Being paid through an umbrella company is genuinely considered the easiest option for contractors because:

• Your administrative burden will be minimal and you’ll only need to submit signed timesheets and allowable expense claims to get paid.
• Registering with an umbrella can be completed in a matter of minutes.
• There is no tie in period, meaning you can join and leave an umbrella company without any complications.
• You do not have to worry about your taxes and NICs because the umbrella company will send these to HMRC on your behalf (you will receive PAYE).

Umbrella Company UK is an industry leading umbrella company that was founded by professionals with over 20 years’ experience in the contractor payrolls sector.

When you use Umbrella Company UK for your payroll, you will get more than just your salary. Our service includes the following at no extra cost:

• Free £25 million insurance cover.
• Employee benefits including Sick Pay and Maternity/Paternity Pay.
• Same Day Faster Payments – meaning you will be paid as soon as we receive your funds.

If you are interested in joining Umbrella Company UK or want to find out more information about our service, please call us on 01707 669023 or complete the short form on this page. If you have any questions about IR35 and umbrella companies, we’re happy to provide you with advice.

If your contract or future contracts are outside IR35, setting up a limited company is likely to be the best option if you want to legally maximise your take-home pay.  Have a go on our calculator below and see the difference between your take home pay through an umbrella company and limited company.