We are often asked by new contractors why they should use us and what the benefits are. Working through a reputable umbrella company will not only save an individual time and money but gives them the peace of mind that their tax and NI contributions are up to date and accurate.
People who are new to this way of working can find it confusing and often query the hourly rate they will receive. An umbrella company may pay a lower hourly rate than the recruitment agency; however this is because once you register with an umbrella company you become an employee of the umbrella company which means you are paid a salary and holiday pay for your duties of employment provided to the umbrella company.
The Umbrella company will charge out a rate to the agency for the services it provides, and will then pay its employees for the work they have undertaken. As well as receiving employment benefits employees may claim expenses they have incurred in the performance of their duties, these expenses can be paid back tax free. This means that as an employee you can receive a reimbursement of expenses tax free in additional to the amount paid to you as taxable salary.
For many individuals operating through an umbrella ultimately means they receive a higher take home pay then individuals directly engaged by an agency, but there are many advantages to using an umbrella company. Having a contract of employment with one company allows employment history to build up. This means umbrella employees qualify for benefits like holiday pay, maternity pay and in some cases even redundancy entitlement. It also makes it easier to approach a bank or building society for a mortgage or loan, they look more favourably on clients who have a contract of employment and can provide pay slips demonstrating a regular income.
Umbrella companies tend to offer a more flexible way of working than recruitment agencies. Working directly for an agency can sometimes mean waiting for payment if relevant paperwork and timesheets aren’t completed on time. This wouldn’t be the case with an umbrella company as they pay employees for hours worked and collect the funds from the agency the following week.
Umbrella employees can work for a variety of different clients through a variety of agencies without a break in employment. This makes tax affairs simpler and avoids the hassle of providing a P45 for each new contract. Tax and NI contributions are calculated for them saving time and protecting the individual from the risk of over or under paying tax.
To find out more about our Umbrella services or to join call us on – 01244 500195
Or you can register with our umbrella scheme online
