It’s certainly not uncommon to notice the word “scheme” when reading about umbrella companies – especially in the press. Unfortunately, these schemes can give fully compliant and honest umbrella companies a bad name.

There are multiple ‘umbrella company schemes’ out there that will promise you the world. However, it is imperative that you avoid these and only register with a compliant provider like Umbrella Company UK.

Let’s take a look at a couple of dishonourable ‘umbrella company schemes’ that are targeting contractors in the UK. Be warned – using these could land you in serious trouble with HMRC!


Loan Schemes

Have you ever seen an umbrella company scheme offering contractors the chance to keep 90 percent of their pay? These adverts are everywhere and not surprisingly, they attract a number of naive contractors who are unaware of the risks associated with them.

Loan schemes typically involve sending the contractor’s money offshore to a known tax haven, such as the Isle of Man, East Asia etc. Once the money is sent offshore, the contractor will receive a loan to an equal amount. The contractor will not be required to pay back this loan and therefore, tax should be paid on it (because it clearly isn’t a loan). However – you guessed it – it’s not with this tax avoidance scheme!

HMRC are retrospectively punishing users of loan schemes and if you engage with one, you should contact them immediately to settle your unpaid tax liability. Ignorance is not an excuse.


Job Board Scheme

These schemes have been outlawed by HMRC and involve some misleading behaviour from recruitment agencies and contractors.

To summarise job board schemes, some of the contractor’s pay will be held back and sent to a job board (third party). The contractor’s skill will then be advertised on the job board and as a result, the contractor will earn loyalty credits that are exchangeable for tax free cash. The tax free cash will then be paid to the contractor without any tax and National Insurance Contributions (NICs). Sounds dodgy right? It is!


If you use a compliant umbrella – you have absolutely nothing to worry about

Umbrella Company UK is fully compliant with HMRC legislation. We cannot offer you 90 percent take home pay because this would be tax avoidance. Instead, when you use our service, you will receive PAYE – just like an employee in a permanent position. We will send your tax and NICs to HMRC on your behalf and you will receive a payslip with the deductions that have been made to your pay. Request a free umbrella company take home pay projection to see how much you could take home.

We make umbrella payroll easy and you can register with us in minutes. Best of all, there are plenty of added extras that you can get for free, including:

  • Same Day Faster Payments – so you can be sure you’ll paid on time, every time.
  • Account Management – we believe that excellent communication is really important.
  • Free £25 million insurance – for your peace of mind.
  • Employee Benefits – including Sick Pay, Holiday Pay and Maternity/Paternity Pay.
  • Many more!


Contact Us 

To register with one of the UK’s leading and compliant umbrella companies, please use the short form on this page or give our friendly team a call on 01707 669023. We’re here to help and look forward to hearing from you! Also, please don’t hesitate to get in contact if you have any questions.

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