Working for an umbrella company

Great news for contractors. The demand to use contractors has been increasing as business owners use contractors to meet seasonal demands while they cut down on permanent staff. 

There are several ways of working as a contractor. One is by joining an umbrella company. An umbrella company acts as an employer to contractors and provides payroll services to contractors. The umbrella company will bill your agency for your services, make the relevant tax deductions, calculate your NI and PAYE and then pay these over to HMRC.

One of the few responsibilities you will experience as a contractor under an umbrella company will be to submit timesheets. Your umbrella company will then process these for you, ensuring that you receive your pay in a timely manner.

If tasks like those mentioned above are taken care of, you will benefit more as a contractor in your industry. You will be able to carry on with your work and rest assured that all the administration is taken care of, leaving you confident to take on more work.

There may well be a few questions lingering in your mind about all of this.

If you were wondering whether or not you will be charged by the umbrella company if you don’t work, the answer here is no. You will only be charged for the timesheets submitted. Perhaps you are wondering if you are able to work through a number of agencies whilst at your umbrella company of choice. Yes, this is possible, and you can add or change agencies at any time.

You will also not need to worry about losing your statutory employment rights. The umbrella company is essentially your employer and therefore you will be entitled to all employee benefits like holidays, sick pay, and maternity leave.

The key benefit of using an umbrella company is that you are afforded work flexibility, your take-home pay is maximised through tax-efficient structuring and, because of this, you will receive a higher net pay compared to someone permanently employed. To add to this, your administration responsibilities as a contractor are minimal, and depending on the umbrella company you use, there will be no joining or resignation fee.

*Pieter Carstens is the manager of 1^st Contact Umbrella. To find out more information about the services the umbrella company provides, please see the website. 

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