Over the last few years the use of Umbrella Companies has become more popular within the contracting market.
Umbrella Companies are popular because they take the hassle out of tax and administration responsibilities. You simply register online with your 
chosen Umbrella service provider. To complete your registration you will need to send in a copy of your passport and visa and your P45 or P46.
Once you are a registered client, you simply log your timesheets online and send in expense claim forms. It’s that simple. Your Umbrella Company takes care of all the administration including processing your payment after making the correct deductions and paying the correct taxes to HMRC. This leaves you free to focus on finding those opportunities and doing the work.
But how can you be sure you are entrusting your hard earned money to the right Umbrella Company?
Deon Smit, 1st Contact Umbrella Manager, offers these 10 tips for selecting the right Umbrella Company to partner with:
Experience
Only consider an Umbrella Company that has been in operation for a number of years. 1st Contact has been assisting contractors with payroll services since 1996. Be wary of any new companies as you run the risk of losing all your money to a fly-by-night operator.
Reputation
It’s all good and well if a company has been operating for years; but what if they’ve been operating badly? Scour the net for blogs and information and speak to longer established contractors about their experiences with Umbrella Companies – the good, the bad and the ugly.
Easy online system
Make sure that your Umbrella service provider has a simple online system that you can easily manage. There’s no point in using an umbrella provider to avoid admin, only to have to spend hours figuring out their complicated registration and submission systems.
Personal service
As important as an online system is, make sure that when you need to speak to a real, live person, one is available to you. 1st Contact Umbrella provides a free consultation with a professional consultant and their telephone lines are open from 8am to 5pm Monday to Friday. They also make it their business to answer all payroll related email queries within 3 working hours.
Fee structure
It is extremely important that you establish upfront that there are no joining fees and no exit fees. Ask the Umbrella Company to provide you with a full schedule of fees to ensure that you aren’t overcharged.
Insurance
What happens if your service provider goes bankrupt? Always ask about the insurance policy to be 100% sure that you will receive your money, no matter what. Your Umbrella Company should have public liability, employers’ liability, and professional indemnity insurance cover.
Expense policy
Some companies may claim an extensive claims policy, but the conditions attached are so extreme that the likelihood of you actually claiming is pretty slim. Do your research and ask as many questions as possible. Avoid any company that states that you don’t need to prove your expense claims – if HMRC does query your expenses and you cannot provide the necessary receipts, the tax liability could fall on you.
Employee benefits
Does your Umbrella Company give you the option of employee benefits such as sick leave and maternity leave? Well established companies like 1st Contact Umbrella can offer you fantastic employee benefits while you enjoy the freedom of working for yourself.
Payment dates
Does the scheme have fixed payment dates you can rely on? Be sure to find out what the payment methods and schedules are and make sure the answers are not vague. You want to know exactly what their payment policy is, so that you have recourse should the timelines not be met.
Relocation costs
Lastly, find out about other benefits. For instance, with 1st Contact Umbrella you can claim relocation costs if they are your first employer when you arrive in the UK. You could be in a position to claim the costs of your flights, shipping, 6 weeks’ accommodation. In fact, up to £8000 could be claimed to give you a tax benefit and in turn increase you net pay. Terms and conditions do apply, but this is a fantastic benefit you are not likely to see elsewhere.
We hope these tips have been of use to you. If you have any questions related to contracting in the UK, Umbrella Companies or the setting up of a Limited Company, visit www.1stcontact-umbrella.com or speak to an experienced and professional consultant by calling 0808 178 8634.
1st Contact Umbrella has successfully assisted over 100,000 clients with our no-hassle, efficient payroll service.
IR35 was first implemented in 2000 as a way to close a tax loophole which allowed contractors to pay reduced tax and NI by offering their services through a limited company. In some instances, contractors were on permanent contracts or recurring contracts – basically working full time for a single employer. This was viewed by the governement as tax evasion, and IR35 was introduced. Unfortunatley genuine contractors were also placed under IR35 legislation, effectively treated as tax evaders and taxed heavily on their freelance income.
