ContractorSupermarket

Viewing What is an Umbrella Company? from 8 Umbrella Company FAQ - Umbrella Company FAQs Written by Contractor Supermarket

---

Contractor Articles Feed - Get the latest Contractor Umbrella Company Articles

---

What is an Umbrella Company?

An umbrella company is the fast food of accounting. Umbrella companies offer a readymade limited company service & payroll solution for contractors. This removes the administrative burdens & responsibilities usually associated with running a limited company.

• An umbrella company will prepare invoices on the contractor's behalf, receive incoming payments from clients or recruitment agencies, and work out the tax owed to HMRC. The contractor simply waits for their money to hit their personal bank account.

Contractors are generally employed in the same was as any company which employs staff. Your umbrella company will be paying you through PAYE, deducting Income Tax & National Insurance from your gross earnings and will issue a P45 if you leave their services and/or a P60 at the end of each tax year.

You will get a standard employment contract with the expectation that you will be working for the umbrella company for more than one contract.

Your home would be considered your permanent work place and any contract you accept is regarded as your temporary work place, this arrangement enables you to claim business expenses.

Regardless of whether your umbrella company requests it, you must get a receipt for every business expense that you claim.

• This is because HMRC can investigate you for up to six years after you make an expense claim. If you claim for a business expense and you cannot prove that you have incurred an actual cost you will have to pay back the tax together with interest.

You will also be covered by the umbrella company's insurances; public and employer's liability and professional indemnity insurance. The insurance provided and level of cover will differ from one umbrella company to another, so check with your recruitment agency what you need for your contract.

Mark Ridgeon, MD of Excellium Umbrella, goes on to explain:

• "All umbrella companies use the same calculations as dictated by HMRC. This means that your earnings will be about the same regardless of the umbrella company you pick.
• The main differences between umbrella companies are the levels of service and the fees they charge.
• "An umbrella company like Excellium Umbrella provides a safe, simple and compliant method of employment for contractors who do not want the hassle of running their own Limited Company."

Visitors who read this article went on to read these articles:

1. Job Centre
2. Thousands of the latest Contract Jobs
3. Advantages of Using an Umbrella Company
4. Umbrella Company Jargon
5. 10 Questions to ask an Umbrella Company

Register here for the Excellium Umbrella company service. It's secure, it only takes minutes & there are no charges or processing fees! It's free to register online with Excellium Umbrella company at Contractor Supermarket!

written on2010-06-23 16:16:47

Add Comments and Feedback about What is an Umbrella Company? in our Forum