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...]

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HELP I have to Register with an Umbrella Company

I have to Register with an Umbrella Company BUT

Umbrella Companies are Confusing

Numbers a Mystery?

If you're new to dealing with an umbrella company it can be a daunting task to ring them up. It's not always easy for an experienced contractor either!

  1. What should you expect?
  2. What questions are you going to be asked?
  3. What questions should you be asking?

For many 'numbers' are a mystery - always have been and always will be - and having to hold a conversation with a stranger on the subject is like sitting a vital exam which you know you stand little chance of passing.

  • You feel lost and uncomfortable, always finding a reason to put off that call to an umbrella company. But that call has to be made.

Don't Panic!

First of all, don't worry! There are at least a hundred different umbrella companies out there, all chasing your custom. If you don't like, or just simply don't understand, the first one you've contacted then just call another.

When you first call an umbrella company, you will be put through to their 'registration' team.

An individual who should know everything about the process and be able to answer every, and any, question you may have.

  • Don't be afraid to say something as simple as 'I need an umbrella company, but I don't know why!' that's all you need say for a good one to be able to put your mind at rest.
  • The registration person at the umbrella company should be able to explain in clear and accurate terms the service on offer, even to someone who has never come across PAYE or employer's NI in their life!
  • It's their job to explain their services to you, if they don't, or plainly can't, then move on.

Do not forget you are the customer, it is your money; ensure you understand what you're being told. If you don't, then don't be afraid to ask them to explain it again - as many times as necessary for you to fully understand.

Umbrella Company Check List

Check List of the basic things you will need to know before you make the call:

  1. Your hourly or daily rate.
  2. Start and end dates of your contract.
  3. How you will be travelling to your contract each day.
  4. What you expect to spend on food and drink each day.

What you want to know from your umbrella company representative:

  1. What service do they offer; can they confirm it is a pure PAYE Umbrella company?
  2. Exactly how do you interact with them on a daily basis?
  3. Do you become their employee; with all employee rights like sick pay and maternity pay?
  4. How often do they run their payroll, is it daily, weekly or monthly?
  5. When do they need your timesheet in by?
  6. What sort of expenses do they allow; do they require receipts?
  7. What documents of yours do they require eg, P45, passport, tax-code?
  8. What levels of insurance cover do they include in their fee?
  9. What do they charge for their service?
  10. What 'extras' are you expected to pay for?

Umbrella Company Advice

  • The umbrella company service should be explained in accurate but simple terms (if you don't understand then don't sign-up).
  • They should have the courtesy not to use industry jargon.
  • They should not encourage you to claim for expenses that you will not incur (that's breaking the law).
  • They should treat you with respect.
  • They should remember that you are the paying customer, not them.

Finally, and a point which can't be stressed too much - you are the customer.

The customer is king. Spend your money with an umbrella company who works hard to earn it. Not with one who thinks they're doing you them a favour.

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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.