Choosing an Umbrella company

As an Independent contractor or freelancer or in similar employment you will be expected to submit invoices for the work that you do for your agency/client. This will mean you’re responsible for income tax and national insurance contributions, unlike a permanent job role where these financial aspects are taken care of by your employer.

Who’s an Umbrella Company for?

• Those who don’t want to set up as a sole trader
• Those who don’t want to set up your own Limited Company
• Those wishing to claim expenses
• Anyone on a short term contract
• Anyone wanting to avoid hassle
• Anyone on a Visa who’s unable to have their own Limited Company

There are two ways this can be achieved: through your own Limited Company or via an Umbrella Company. Most contractors opt for the latter, avoiding all the hassle that comes with running your own company. Umbrella Companies allow contractors to steer clear of added responsibility and extra admin associated with your own Limited Company, not to mention all the legal ramifications that must be addressed.

How does it work?

An Umbrella Company will raise invoices on your behalf for the hours/days that you work. They will then, make payment to you with the appropriate deductions for tax and national insurance. When choosing an Umbrella Company check the payment terms. Many only pay once they have received cleared funds into their account from your client or agency. Usually this is not an ideal situation, due to the lag in payment that is inevitable. Because JBT perform full client credit checks, we can insure you’re payments and are able to offer Payment Guarantee. This means you get paid on time every time, even if we receive payments from client or agents late, so that you know your pay date months in advance. Check the Payment Schedule.

Another advantage of Umbrella Companies, is that you’re able to claim business related expenses, for the time that you are at work, similar to those expenses available to those with their own limited company. For a full list of expenses that JBT Contractors can claim, check the Claiming Expenses page. Remember that JBT do not charge any extra for claiming expenses and that payments are made on the same day as your usual earnings payments.

Umbrella Companies make payments in much the same way as for permanent employment, you receive a pay slip and your earnings are PAYE (pay as you earn). PAYE Umbrella’s are a term used to explain how Umbrella’s operate. Ours is also a PAYE Umbrella, as are all Umbrella’s which are regulated by the Inland Revenue. PAYE Umbrella’s are actually all the same, in terms of how much you earn since claimable expenses are outlined by the Inland Revenue. The only differences between Umbrella Companies are the services it offers. For example, fees and “extra’s” are often charged separately, it depends on the individual’s circumstances as to how they gauge services.

PAYE Umbrella Company Checklist

With so many Umbrella Companies on the market, you may want to cut through the jargon and find out what’s really on offer. Here are a few questions to consider when choosing an Umbrella. Each individual will have different needs, but it’s a good idea to find what’s on offer, particularly for first time contractors.

• What are the fees I have to pay?
• Are there extra charges for making expense claims?
• When will payments be made?
• What expenses can I claim?
• Do I pay fees for day’s I don’t work?
• What if I start mid week, do I pay the full week’s fee?
• Same for month (if monthly or weekly fees apply)
• What will my take home pay be?
• Are there charges for leaving?