Umbrella Companies

As a contractor you have the choice of setting up your own business or operating on a PAYE basis.

By choosing to set up your own business you have a commitment to managing the finances of the business and the personal responsibility of working compliantly with relevant legislation. Most freelancers running their own business work on a self employed sole trader basis or incorporate the business as a limited company.

Rather than operating through their own business, many contractors choose instead to provide their services as an employee and be taxed under PAYE rules, either by working through an agency on their payroll or by working through a specialist umbrella company.

Since the introduction of IR35 legislation in 2000; a contractor umbrella company has become an attractive way of being paid without the hassle of running a limited company.

Umbrella companies provide a simple, efficient and reliable way of getting paid. Having your payments processed through a contractor umbrella company alleviates the responsibility of running your own limited company and allows you to focus on your contract without the paperwork.  

If you work through an umbrella company, you are an employee of that company. This employment can continue if you change assignments and the new assignment is with another agency.

A contractor umbrella company service will typically undertake the following:

• invoice your agency/client for the hours you have raised 
• collect payments from your agency/client 
• calculate the PAYE and National Insurance contribution and deducts and pays it to the UK authorities 
• make a net payment into your personal bank account 
• comply with all company and other statutory issues, including company law requirements to file accounts and returns to Companies House
• calculate and make payment of VAT and corporation tax liabilities
• run payroll calculations and makes returns and various other statutory requirements
• provide business insurance to meet claims made by your clients against negligence or service deficiencies

A major feature of umbrella employment is the potential to claim tax relief on travel and subsistence expenses working at temporary work places.

Featured Service Providers

Umbrella Company 4 Contractors
Enjoy the benefits of contracting without the administrative hassle!

planIT Umbrella Company
A firm of Chartered Accountants dedicated to providing a complete financial service solely for contractors.