Choosing an umbrella company can be tricky since there are many legislative changes that you must consider. In this article, we are going to do an in-depth analysis of how to choose the best UK umbrella company that satisfies all your needs and offers friendly support at all times.
An umbrella company employs the contractor under an overarching employment contract to enable them to work for the endclient. The umbrella company pays a salary to the contractor after taking care of the national insurance and the PAYE tax contributions.
The working of an umbrella company is simple and straightforward. Payment is facilitated to the contractors after the deduction of the national insurance and the PAYE tax. The workers are paid based on the timesheet submission by the contractor. As an employer, the umbrella company also provides payslips to its contractors. If you want to engage with an umbrella company for a longer duration, consider the following essential recommendations.
Transparency should be the driving factor while choosing an umbrella company. A responsible umbrella company gives correct information to the contractors about the entry and exit fees, the penalties, if any, that may be levied during the termination of the contract, any hidden costs, etc. A thorough check of your preferred umbrella company for example where they are registered, accreditations etc. can save you the hassle later on.
There are umbrella companies that would never tell you about the possibility of claiming expenses without having valid proof of purchase. When HMRC examines it, your expense claim will not be considered, and you will be liable to pay for the tax that you have saved onthe claim.
You may come across some umbrella companies that have just started, making tall claims and false promises to secure contracts. Look for established and experienced companies to receive quality service. Recognised Umbrella Companies will usually be accredited by APSCo, FCSA, ISPE, Professional Passport and similar.
Auditing is increasingly important nowadays. It is a process of examination of financial statements by an independent body that generates the audit report and communicates the same to the company. In-depth research is necessary to find out whether the umbrella company you are going for is auditory compliant. Remember that the HMRC will investigate your organization and not the umbrella company.
Finally, test the umbrella company on the scale of customer support responsiveness. Before choosing and initiating business with an umbrella company, give weightage to their response in providing assistance and handling the queries. Umbrella companies who are fully automated and offer online services are cheaper but before taking a further step, but it is prudent to check certain parameters such as whether a dedicated account manager will be provided, what will be the payment procedure, etc. A thorough background check and a word of reference and recommendation will influence and assist your decision of doing business with the said company.
This section is included so that you get to know some of the most common questions that are asked by the online audience in discussion forums. We did our best to provide you with accurate and precise answers
Yes, you can switch from a limited company to an Umbrella Company at any time as per your suitability. No law states you can't. Nowadays, many of the workers prefer umbrella companies over otherstructures because of the transparency factor, promptness in payments, and their thorough understanding of every aspect of contractors. You can also work on two simultaneous contracts one via an umbrella company and the other through Limited Company.
An umbrella company gives opportunities to contractors and freelancers to be employed through the recruiting agencies. It employs workers on over-arching contracts so they can take up multiple assignments. An umbrella company is essentially an intermediary between the contractor and its end client. The end client pays the umbrella company who then pays the contractor who is a full-time employee of the umbrella company.
Please note after April-2016, no compliant Umbrella can pay you expenses before deduction of tax and NI (except for certain expenses) and can only do through a fixed expense pot. There are still restrictions on a lot of claimable expenses, depending on whether your contract is subject to Supervision Direction Control (SDC). However, if the contract does not fall under SDC, the contractor can claim the mileage (provided the workplace is temporary), the cost of pieces of equipment used to complete the project, and the cost of training that was imparted for the contract.
A lot of thought goes into the selection of the right umbrella company that can enhance your experience as a contractor. Consider hiring a company that saves your time, provides hassle-free services and looks after your interests first. After reading this article, you can easily differentiate between a good and a mediocre umbrella company. Check out our company’s website and take a look at the services we offer. Connect with us to know more.