In the past the benefits for workers of using an umbrella service were clear. With the option to claim various expenses it was a tax efficient approach to being paid. However, there have been so many changes to tax legislation in recent years that for workers the tax benefits have sadly been eroded.
For agencies, though the benefits of partnering with a professional, modern and forward thinking umbrella company are more significant than ever.
As a consequence of changes to legislation and the introduction of new employment laws, there is so much for agencies and recruiters to be aware of. The additional burden this places on small and medium sized recruitment businesses, as well as their larger counterparts, can be huge. By working with a reliable umbrella provider, like Exchequer Solutions, agencies can save time and reduce administration. It also means that legal responsibilities and associated risks of employing staff are taken on by the umbrella provider.
A reliable, professional umbrella provider is basically an outsourced employer and will take care of:
- RTW (Right to Work) checks
- Pensions auto-enrolment
- Apprenticeship levy
- Ensuring minimum wage is always met
- The right level of tax and NI is always paid
- As well as other employer obligations such as sick pay and maternity/ paternity pay where applicable.
For agencies the advantages are clear; the admin and burden of dealing with legislation is taken on by the umbrella provider. This minimises risk for the recruitment agency and saves recruiters time, freeing them up to focus on their day job.
There are still clear benefits for workers too. Depending on circumstances some contractors are eligible to claim expenses. Continuation of employment can also be advantageous, having just one employer can make life easier, it helps keep admin and tax related paperwork to a minimum when moving between site or from one agency to another. Being able to demonstrate continuity of employment can also help when trying to secure a mortgage or other forms of credit.
With an umbrella company like Exchequer Solutions there are also options available to workers if their circumstances change. Many of our umbrella employees have gone on to set up their own limited company with the help and support of our sister company Exchequer Accountancy Service which means we can offer a continuous service and options to suit different circumstances.
At Exchequer Solutions we would recommend using an umbrella service to agencies of all sizes and believe all recruitment agencies can benefit from the right partnership. For smaller recruitment agencies, in particular those without the resources or their own in-house back office department, a professional, compliant umbrella service can offer the perfect solution.