10 Top Tips for choosing an Umbrella Company

Over the last few years, the use of umbrella companies has become more and more popular within the UK contracting market, especially since the complicated IR35 rules were introduced.

With an umbrella company, most of admin duties are taken care of for you – you simply register online with your chosen umbrella service , then log your timesheets and send in expense claim forms. Your umbrella company takes care of all the administration and legal compliance issues, including processing your payment after making the correct deductions and paying the correct taxes to HMRC. This leaves you free to focus on finding those opportunities and doing the actual work.

But how can you be sure you are entrusting your hard-earned money to the right umbrella company? Look out for these top ten must-haves.

1. The necessary experience

Only consider an umbrella company that has been in operation for a number of years. Be wary of any brand new companies, as you run the risk of losing all your money to a fly-by-night operator. 1st Contact has been assisting contractors with payroll services since 1996.

2. A solid reputation

Sometimes a company has been operating for years, but they’ve been operating badly. Scour the net for blogs and information and speak to longer-established contractors about their experiences with umbrella companies – the good, the bad and the ugly.

3. A transparent fee structure

It is extremely important that you establish upfront what the fees are. Make sure that there are no joining fees and no exit fees. Ask the umbrella company to provide you with a full schedule of fees to ensure that you aren’t overcharged. Finally, make comparisons before making your choice.

4. An easy-to-understand payment policy

Find out if the umbrella company’s scheme has fixed payment dates you can rely on. Also make sure you find out what the payment methods and schedules are and be suspicious if the answers are in any way vague. You want to know exactly what their payment policy is, so that you have recourse should the timelines not be met.

5. A straightforward online system

Make sure that your umbrella service provider has a simple online system that you can manage. There’s no point in using an umbrella provider to avoid admin, only to have to spend hours figuring out their complicated registration and submission systems.

6. Personalised service

As important as an online system is, make sure that when you need to speak to a real, live person, one is available to you. 1st Contact Umbrella provides a free consultation with a professional consultant and their telephone lines are open from 8 am to 5 pm, Monday to Friday. They also make it their business to answer all payroll-related email queries within three working hours. When scouting for an umbrella company, ask them what their waiting time is for correspondence.

7. A comprehensive expense policy

Some companies may claim an extensive claims policy, but the conditions attached are so extreme that the likelihood of you actually claiming is pretty remote. Do your research and ask as many questions as possible. Avoid any company that says that you don’t need to prove your expense claims – if HMRC does query your expenses and you cannot provide the necessary receipts, the tax liability could fall on you.

8. Employee benefits

Does your umbrella company give you the option of employee benefits such as sick leave and maternity leave? Well-established companies like 1st Contact Umbrella can offer you superior employee benefits while you enjoy the freedom of working for yourself. Ask about sick pay and maternity pay and find out what ALL the conditions are.

9. The necessary insurance cover

What happens if your service provider goes bankrupt – will you still be paid at month-end? Always ask about the insurance policy to be 100% sure that you will receive your money, no matter what. Your umbrella company should have public liability, employers’ liability, and professional indemnity insurance cover.

10. Other benefits

Lastly, find out about other benefits. For instance, with 1st Contact Umbrella you can claim relocation costs if they are your first employer when you arrive in the UK. You could be in a position to claim the costs of your flights, shipping and up to 6 weeks’ accommodation. In fact, up to £8000 could be claimed to give you a tax benefit and in turn increase your net pay. Terms and conditions do apply, but this is a fantastic benefit you are not likely to see elsewhere.


We hope these tips have been of use to you. If you have any questions related to contracting in the UK or registering with an umbrella company, visit www.1stcontact-umbrella.com or speak to an experienced consultant by calling 0808 141 2341.

1st Contact Umbrella has successfully assisted over 100,000 clients with their no-hassle, efficient payroll service.


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