Employment Status

Are you a contractor? If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.

Your employment status will determine the charge to tax on income from your employment or self-employment. It will also determine the class of NICs, which are to be paid.

Umbrella Companies employ you for tax purposes and complete central returns for all their contractors. It's less hassle and more flexible for you but take home pay is typically less than that the limited company option.

The best option for you depends on your plans, 'one off' contract or 'contractor for life'? [Read More...]

You are here: | |

Professional Relationships of a Contractor Umbrella Company Alternative

Rewarding Contractor Career

There are three main contractor relationships that are vital to understand. It is important to handle these relationships properly for an on-going and rewarding career as a freelance contractor.

These are the basics of the relationships that a contractor should know and understand:

1. Recruitment Agency

Your recruitment agent is vital to you for a successful contracting career. The recruitment agent will be largely responsible for finding you a continual supply of contract work.

The recruitment agency has a relationship with the end-client to find suitably skilled contractors to complete various specific tasks, and agrees an hourly/daily rate with the client for each job.

Your recruitment agent will have a contractual relationship with your umbrella company in which you are the person named to fulfil the given contract role.

See what our Experts say about recruitment agency pressure on umbrella company choice.

2. The Client

As a contractor you do not have a direct contractual relationship with your client. Your client has a contractual relationship with your umbrella company in which you are the named person to fulfil the given contract role.

You are in the strange position of being an employee and client of your umbrella company.

3. The Umbrella Company

As a contractor you become an employee of your umbrella company. Your umbrella company will have a contractual relationship with your recruitment agency and your end-client, in which you are the named person to fulfil the given contract role.Getting Paid

  • Once you have done the contract work you need to be paid. How?
  • Send your completed timesheet to your umbrella company
  • Your umbrella company invoices your recruitment agency
  • Your recruitment agency will invoice the end-client
  • The end-client then pays your recruitment agency
  • The recruitment agency pays your umbrella company
  • Your umbrella company will pay you a net salary after tax.

[46283 Page Views]

HMRC Compliance

It's the basics... Compliance with Tax, VAT, PAYE and fiscal arrangements is mandatory for contractors regardless of whether you use an umbrella company or your own limited company.

Incredible then that there are still rogue umbrella companies and limited company accountants who expose their contractors to fraud. Umbrella Compare provides THE solution, we thoroughly vet all umbrella companies and limited company accountants that we list [Read more...].

Umbrella Compare provides a holistic overview of contracting with the aim of helping new and old contractors find the right payroll solutions. Contracting should be about focusing on the contract, not payroll, accounting, HMRC and bureaucracy.