What is an umbrella company and what purpose does it perform?
An umbrella company is an ‘employer of record,’ enabling temporary or agency workers to be employed and paid, as well as ensuring that employment rights are protected and that the necessary workplace insurance is in place.
The umbrella company takes care of administrative and contractual responsibilities, allowing workers to concentrate on providing the service to the end-hirer, but as an employee of the umbrella and not of the client (hirer).
As the umbrella is the "employer of record", the client (hirer) will not be at risk of the worker being considered a "disguised employee". The legislation around disguised employment (or false self-employment) is also known as IR35.
Fact: Temporary workers are now required to be employed rather than ‘self-employed’ and an umbrella company is considered the simplest, cheapest and most efficient way to ensure this happens.
How do I know if an umbrella company is compliant with HMRC?
If all your income from your umbrella company is detailed in a payslip and accompanying payslip reconciliation statement, then it’s highly likely that your umbrella company is paying you in a manner which is compliant with HMRC’s own interpretation of the rules.
Fact: There are several certification bodies for umbrella companies which would normally mean that they are broadly ‘compliant’. These include FCSA accredited membership and membership of APSCo or Professional Passport. Your agency may insist that you use an umbrella company accredited by one of these three bodies or alternatively on their own ‘approved’ providers.
Transparent Umbrella Company works with most agencies and is currently in the process of becoming an accredited member of the FCSA.
Why do I pay both Employee and Employer National Insurance contributions when working through an umbrella company?
As your employment and payroll has been outsourced from your agency to an umbrella company, your umbrella pay rate is normally increased to reflect the fact that the umbrella company (as your employer) will need to pay the employer related costs and taxes, which normally include Employer National Insurance and the Apprenticeship Levy.
Fact: Your umbrella pay rate is NOT your real pay rate. Always ask your agency for both an agency PAYE rate (so if they employed you) and an umbrella pay rate (if your employment is outsourced to an umbrella). Your real pay rate is your agency PAYE rate, which is normally lower than your umbrella rate. When comparing opportunities, always ask for, and compare, both agency PAYE pay rates as well as umbrella pay rates.
What payroll choices do I have when contracting in the public sector?
Your choices when contracting in the public sector would normally be limited to either working through an ‘approved’ umbrella company or being employed and paid by your agency directly. It is very unlikely that you will be able to work through your own limited company or be engaged as a self-employed person.
Fact: Always ask your agency for a quote for employment and payroll through them directly (agency PAYE pay rate) as well as getting quotes from umbrella companies using the umbrella pay rate.
Are there any alternatives to using an umbrella company?
The two main alternatives to using an umbrella company are being employed by your agency directly (they payroll you as their employee) or by using your own limited company.
Fact: Not all agencies will offer their candidates the option of being employed and paid by them directly (otherwise known as ‘agency PAYE’)
Why should I choose the Transparent Umbrella Company?
Choosing the Transparent Umbrella Company will give you access to some of the lowest umbrella fees in the UK (from £1 per day.) Our technology will also help you keep track of both paid and unpaid time, as well as providing complete transparency in terms of fees and taxes.
Fact: Transparent Umbrella Company is committed to driving down the cost of umbrella employment and payroll as well as improving transparency of all payments and taxes.
Can I claim expenses through Transparent Umbrella Company?
Most agency workers are NOT able to claim expenses (and offset them against income tax) when working through an umbrella company, unless they are working overseas. Some agency workers will have their work mileage ‘reimbursed’ to them, but this is normally when they are using their own car to complete business mileage.
Fact: Always ask your agency for clarification regarding any ‘reimbursed expenses,’ for example business mileage and overnight accommodation that may be required to fulfil your role.
What are Transparent Umbrella Company’s fees and charges?
Depending on the service level you choose from us, then our charges (otherwise known as the umbrella fee or company margin) can be as low as £1 per day. Our highest fee is normally £5 per day or £25 per week.
Fact: We regularly look to beat any ‘like-for-like’ fee you have been quoted by an alternative umbrella company.
How quickly do I get paid through Transparent Umbrella Company?
Transparent Umbrella Company runs payroll every working day but can only normally pay you once it has received funds from your agency. Depending on the service level you choose from us, you will either have funds in your account on the same day as we receive them, the next working day, or two days after we sent the money (day three.)
Fact: Most agencies and umbrellas use the BACS payments system. These payments take 3 working days, so if we send funds to you on a Wednesday, you’ll normally have them in your account when you awake on Friday. If we send them on a Thursday, you’ll receive funds on Monday.
I’d like to use Transparent Umbrella Company. What do I do next?
Either download our app here or follow this link to complete our short online form. Completing registration is free and you will be under no obligation to use our services.
Fact: It only takes a few minutes to complete registration. This enables Transparent Umbrella Company to contact your agency and request details of your contract role. To speed things up it may be worthwhile reminding your agency that you have chosen a low fee umbrella package from Transparent Umbrella Company.