WHAT IS AN UMBRELLA COMPANY?

Umbrella companies explained

An umbrella company provides an employment platform for contractors who work inside the IR35 regulations. If your contract falls within scope of the off-payroll rules, it is the most popular solution other than a PAYE direct engagement with your end client or agency.

What does an Umbrella company do?

An umbrella service gives you legal employee status and handles all of your paperwork. The Umbrella company will: 

• Process your timesheets
• Calculate PAYE tax and NI contributions
• Invoice your client
• Collect monies and help ensure that you are paid on time.

What are the benefits of an Umbrella company?

Contracting through an umbrella company brings several benefits:

• Employee Benefits – When you're employed by an Umbrella company, you’re entitled to employee benefits such as Statutory Sick Pay, Statutory Maternity Pay, Holiday Pay, and a State Pension
• Convenience - The umbrella company deals with the end-client or agency directly regarding payment across all of your contracts. This removes the administrative burden of chasing payments or dealing with multiple contacts
• Continuous employment - Working through an umbrella company provides you with a continuous work history. This can be helpful when applying for borrowing or when you need employment references.

Conclusion 

Contracting offers flexibility, the opportunity to work on diverse projects, and often results in higher pay compared to permanent roles. By joining an umbrella company, you can enjoy the freedom and flexibility of contracting work while still benefiting from the stability and protections typically associated with traditional employment.