If you’re a contractor in the UK, and you are not ready to start a limited company, you should seriously consider joining a reputable umbrella company.
If you’ve heard about them but you’re unsure how it all works, here’s an explanation, along with 5 compelling reasons to check it out.
What is an umbrella company?
An umbrella company is basically a company that acts as your employer, but only when it comes to payment. You continue to find your contracts and do your work as usual, but instead of being paid through the agency and having to take care of all your own PAYE and tax issues, you simply invoice the umbrella company and they pay you, with your PAYE and other deductibles already taken care of.
1. No long-term commitment
This is the perfect option for first-time contractors and you can use an umbrella company even for a short contract between permanent jobs. Signing up is quick and quick and easy, and when you’re ready to leave, that’s a piece of cake too, provided you choose a reputable company – and ensure they do not try to tie you into any long term contracts or charge a leaving fee.
2. Less admin on your part
Joining an umbrella company like 1st Contact Umbrella means you can use your time to find contracts work; your administrative input is kept to a minimum. The most tedious thing you’ll do is submit your online timesheets and claim sheets. The umbrella company will do your invoicing and payment collections on your behalf.
3. No need to calculate your own tax
The umbrella company also handles your tax matters, calculating and paying your tax and NI contributions to HMRC.
4. Employee benefits
With a 1st Contact Umbrella, you are able to claim full statutory employment rights, including maternity, paternity, sick and holiday pay. You don’t get that just working for yourself, do you?
4. No nasty penalties from HMRC
UK tax is notoriously complicated. But when a professional and experienced umbrella company deals with all your tax and administrative issues, you can be assured of legal and tax compliance at all times, so you will not have to face exorbitant tax penalties should you miscalculate or do something wrong.
5. Claim expenses
HMRC allows independent contractors to claim certain expenses. You simply submit your claims, the umbrella company processes these expenses for you simply hang on to your relevant receipts.
Do a little research before you join just any umbrella company. Find one that charges no joining or leaving fees and only charges you a small fee on actual timesheets submitted. That way, if you’re between contracts, you don’t pay them anything. It’s also important to make sure your umbrella company has an excellent reputation with agencies, HMRC and contractors alike.
Visit www.1stcontact-umbrella.com to find out more about umbrella services or register online.