Umbrella Company Services
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We hope this page will tell you everything you will ever need to know about using an Umbrella Company
Click on the links below to read our more detailed guides:
Contractor Umbrella Company Guide
This is where you ' the contractor' essentially become an employee of the umbrella company. You submit time-sheets to the umbrella who will in turn, invoice the end client (or agency) for the work done by you. You will then be paid as a PAYE employee less the umbrella fee.
There are many urban myths surrounding umbrella companies and the way that they work and you should be wary of firms advertising 'special' dispensations or expense policies 'approved by' the Inland Revenue, that claim to allow expenses without the need to produce receipts. The Inland Revenue has made it clear that it intends to challenge any company considered to be actively encouraging tax avoidance through fraudulent expense claims.
SJD Accountancy provides Umbrella Company Services to contractors and freelancers through it's sister company ContractorUmbrella.
Limited Company or Umbrella Company - is it right for me?
Click here to read our quick guide. If you earn less than £25k or are on a short contract and don't intend to stay contracting for long, then maybe an umbrella service would be best for you. Ultimately, the decision it is up to you; working through an umbrella company is simpler than working through your own limited company but you will take home less money from your contract.
How does it work using an Umbrella Company?
Read the steps below or click here for a flow chart of what takes place between an umbrella company, recruitment agency and end client:
- The umbrella company will sign a contract with your recruitment agency.
- You will sign an employment contract with the umbrella company.
- You submit both timesheet and expenses information.
- The umbrella company will invoice your agent/client for the work you have done.
- The umbrella will receive funds for you from the agency.
- You receive your money less tax, NI contributions and the Umbrella services fee and your umbrella company will send you a payslip just as with permanent employment.
Umbrella Company - Take home pay calculator
The key question on all Contractor's minds is 'how much will I earn / take home'? You'll typically take home anywhere between 60% - 65% of your contract value. However, for a more accurate calculation try ContractorUmbrella's take home pay calculator. Simply input your weekly/monthly income and predicted expenses and it will instantly estimate your take home pay for you.
Contractor Expenses using an Umbrella Company
By claiming all appropriate allowances and expenses you can minimise your tax bill; however, this is not a way of avoiding tax. Obviously receipts should be kept for all the expenses that you claim. Remember it is you the Revenue will investigate and not your umbrella company, be very cautious of companies who say you do not need to keep receipts and can claim for things you have never actually bought. If you can't prove it the Revenue will view it as tax avoidance.
For a full and comprehensive list of what you can claim click here.
Moving from Permanent to Contracting
Although permanent work has the security of a regular income and employment benefits, contracting is where the real money lies. Read how all about one contractors experiences of leaving behind the world of permanent work and making the jump into contracting.
If you choose to use ContractorUmbrella, but then wish to convert to a Limited Company at any time ContractorUmbrella will arrange this for you quickly and easily visit www.contractorumbrella.com, or call 01206 713680 to find out more.
Quick Guide to Limited Companies
It is very important to stress that these must be genuine, one person limited companies and not a 'scheme' dreamed up by what are nothing more than marketing organisations.
The first things you, the contractor will need to do are form a limited company (this should only take 10 minutes and open a business bank account (your accountant will help you with this). The director controls invoicing, the company bank account and decides on how much to pay themselves, which is made up of a combination of salary and dividends.
The limited company's contract can either be with the end client or the agency and the company can claim as tax free expenses: travel and subsistence, hardware and software, training, professional subscriptions, business telephone, accountancy fees plus any other business costs.
We've summarised the pros and cons of each method here, for a more detailed review click here for our full first-timer guide and here for our step-by-step guide to contracting.
You may also like to read our Guide to Contractor Expenses and take home pay case studies of a contractor who is using an umbrella company and another who's working through their own limited company.
SJD Accountancy provides Umbrella Company Services to contractors and freelancers through it's sister company ContractorUmbrella.
ContractorUmbrella Ltd
ContractorUmbrella is part of the SJD Accountancy group and was formed in 2002 to provide employment services to UK based contractors who do not wish to operate through their own Limited company.
They are also the first umbrella company to be fully compliant with all Managed Service Company (MSC) and debt transfer legislation, as reviewed by KPMG. This is important as many other umbrella companies claim to be HMRC compliant - but can they prove it? ContractorUmbrella can, read KPMG's review.
ContractorUmbrella is an alliance partner of Contractor UK, Contractor Money, FreelanceUK and is an associate member of the Professional Contractors Group.
They offer:
- Low weekly/monthly fixed fees
- NO entry or exit fees
- Money backed service guarantees
- No voice mail or automated call handling - all calls are answered by real people and within three rings.
Unlike other Employment Service Companies and Umbrella Companies they will not take a percentage of your income, their weekly or monthly fees remain the same regardless of your earnings. For the duration of each contract you will be guaranteed a payment from them regardless of whether they have received funds from your agency/client - this is a unique service within our industry.
If you choose to use ContractorUmbrella, but then wish to convert to a Limited Company at any time ContractorUmbrella will arrange this for you quickly and easily.
If you have any questions about ContractorUmbrella or using an umbrella companies please call 01206 713680, e-mail info@contractorumbrella.com or visit www.contractorumbrella.com .
SJD Accountancy
SJD Accountancy is the UK's largest specialist provider of fixed fee, limited company accountancy services to contractors and freelancers. SJD have been acting for contractors across the UK since 1992, have more than 8,500 clients; are the only National specialist firm of accountants with offices in all major cities; are the most recommended accountancy firm on the internet and have more qualified staff than any other specialist firm with qualifications from the following major Tax and Accountancy bodies - ATII, ATT, ACCA, CA, ACA, FCCA, ACMA.
SJD have also won every relevant award possible, including: the Accountancy Age Award for Excellence in 2007 and 2004, Contractor uk 'Best Contractor Accountant' for the last two years, Sunday Times 'Best company to work for'; are a Quality Accountant as recommended by the Professional Contractors Group (PCG) and are recommended by the Sunday Times.
If you have any questions about contracting through your own limited company or would like any further advice please call our New Client Services Team on 0500 152 500 / 01442 232700 or e-mail leanne@sjdaccountancy.com
