By definition, an umbrella company is an intermediary between the temporary worker and the end-client or the recruitment agency.
The umbrella company is an Employer of the temporary worker who works on short-term contracts or assignments. The temporary worker becomes an Employee of the umbrella company and not the end-client or the recruitment agency.
What does an umbrella company do?
Umbrella company employs temporary workers. They pay the worker, manage their timesheets, and invoice the end-client or the recruitment agency. They pay salary directly to the employee’s bank account after deducting necessary taxes and deductions like PAYE and National Insurance Contributions (NICs).
Their role is primarily of an administrative nature.
Are umbrella companies HMRC approved?
No. Umbrella companies are not HMRC-approved or regulated by the government. If you come across any umbrella company that says they are HMRC-approved or government-regulated, they’re most likely a fraud company.
How many umbrella companies are there in the UK?
Over 500 umbrella companies are operating in the UK.
Are umbrella companies legal and trustworthy?
Umbrella companies are legal and most companies are trustworthy. It is best to do complete due diligence before appointing any umbrella company.
Is it easy to switch from Limited Company to Umbrella?
Yes, it is very easy and straightforward. Umbrella company will guide you during this transition.
What is the benefit of working through an umbrella company?
The hassle of managing your finances, taxes and deductions goes away when you appoint an umbrella company. Allowing you to focus on what you do best, i.e. contracting. You don’t have to setup and manage your Limited Company
How to find the best umbrella company?
This is easier said than done as there are hundreds of umbrella companies to choose from. You need to ensure that the umbrella company you appoint is fully compliant and reliable.
Not to worry, if you are looking to appoint an umbrella company, you can have a look at our list of the best umbrella companies in the UK and select the one that suits your needs.