Umbrella companies are just there to help people avoid tax
This is not the case. Ensuring workers are paid tax efficiently is one of the aims of an umbrella service, being tax efficient doesn’t mean avoiding tax. It means paying the correct amount of tax. However tax is not the only role of an umbrella organisation, they do lots of other things including give their umbrellas employees the benefits of employment such as sick pay and an employment contract. Being tax efficient is not the same as avoiding tax, a reputable, compliant umbrella service will want to ensure you pay the right amount of tax and claim for everything you are entitled to. At Exchequer Solutions we support and advise our umbrella employees too.
All umbrella companies are the same
Not true. Like any type of business there are some organisations that are more professional and more efficient than others. You trust your umbrella company with your pay so make sure you choose a company that is reliable and you are comfortable with. Ask them questions about their service and make sure they know what they are talking about.
Umbrella companies are just out to take your money
Would you say the same about an accountant or other professional services provider? A professional umbrella provider offers a valuable service and charges a margin for this.
Working for an umbrella company I can claim expenses for all sorts of things
It’s important to be clear on what you can and can’t claim. If a company suggests you can make claims for everything including the kitchen sink then alarm bells should be ringing. Claims must be allowable and relate directly to your work. There is more information on what expenses you can claim here.
If I’m registered with an umbrella it’s like being self-employed
If you are registered with an umbrella service you will have a contract of employment and are legally employed. This means being entitled to sickness pay, maternity/ paternity pay and other benefits which come with a contract of employment including redundancy pay after a qualifying period.
