Umbrella Company Benefits

Benefits For Temporary Workers and Freelance Contractors

An umbrella company acts as an employer to individuals who work in temporary roles. It means you can enjoy the best of both worlds.

You'll benefit from a higher rate of pay than as a permanent employee yet still get all the benefits of working through a big company. Things like sick pay and insurances.

So the contractor is better off?

Yes, if you use an umbrella company. You'll get the freedom & flexibility afforded by contracting plus all the benefits and convenience of being an employee.

What are the main financial benefits of working through an umbrella company?

There are both financial and time benefits of working through umbrella companies.

Firstly the you're entitled to a higher rate of pay due to the agency uplift (normally provided by the agency because they do not have to pay your Employer's NI when you're working through an umbrella company).

Secondly you can offset business expenses that are (wholly & exclusively) related to the work that you do against your tax.

Are you sure they can claim these expenses?

In all instances these are expenses that are within HM Revenue & Customs guidelines. Your expense payments will usually be made at the same time as your salary payments. Most common expenses are travel, subsistence (lunches) and phone calls.

How does this affect the contractor's take home pay?

Expenses decrease your taxable salary (by the same amount) and so reduces your PAYE and NI taxes. You even get a higher net pay!

What are the time benefits of using an umbrella company? The time management saving & satisfaction comes through the umbrella company's service that ensures all your tax payments are made and every transaction is documented and recorded.

• The umbrella company service also covers you with Public Liability and Professional Indemnity cover.
• Some are able to fast track your National Insurance applications if required.

Your umbrella company will issue invoices on your behalf, collect payments from your agency/client, pay your PAYE tax and NI contributions to HM Revenue and Customs and then transfer your net pay straight into your personal bank account.

Why not just set up your own limited company?

An umbrella company is the easiest, most simple and cheapest way to go contracting these days. You get this fantastic service but there are none of the administrative & regulatory hassles associated with self employment or running your own limited company.

It's that simple - and you even get a higher net pay!