There are many reasons why you might choose to work with an umbrella company but if you have never worked in this way it can seem like a minefield. You will probably have heard conflicting advice from different people and there are plenty of misconceptions out there about the benefits of an umbrella company as well as the disadvantages.
The benefits of an umbrella company can be different for different workers. These are just some of the reasons our Exchequer umbrella employees have shared with us about why they work with an umbrella company.
The security of employee status is important to many of our workers as well as the numerous benefits that go hand in hand with being employed. For example sick pay, holiday pay and other benefits such as entitlement to paternity/maternity leave.
As an umbrella employee you benefit from the best of both worlds. The flexibility to accept different assignments and work in different locations whilst still remaining employed by one organisation.
Many of our contractors have been with us for years and worked on different sites through different recruitment agencies. They are still paid on the same day by the same organization, which many see as an advantage over working directly for different recruitment agencies. On paper you have one long term employer and this can be particularly helpful when applying for loans or mortgages.
A good umbrella company will make sure you are being paid in the most tax efficient way and can off-set legitimate business expenses against tax. This wouldn’t routinely happen if you were paid directly by a recruitment agency so it could save you money. See our expenses guide for more information on what allowable expenses you can claim.
Working through an umbrella company means the amount of administration you do is minimal. It is quick and easy to register and get started with an umbrella company. With Exchequer as long as you are registered with us before 2pm on a Friday you can even be paid the same week! An umbrella company will pay you on agreed dates and will invoice your recruitment agency so no more chasing agencies for payment.
Benefits of an umbrella company infographic
Our workers can relax safe in the knowledge that their tax and NI contributions are calculated for them. They know they are fully compliant and don’t have to worry about the detail because it is taken care of for them. No tax returns to complete unlike if you were to set up as a Ltd company and no unexpected tax bills.
The umbrella option is a perfect solution for those wanting the freedom and flexibility of contracting but don’t want or aren’t quite ready for the added admin and work that comes with running your own company.