Guide to Using an Umbrella Company

The process of working under an umbrella company is different than contracting under a limited company. Read below to understand the steps between an umbrella company, recruitment agency and end client.

What is an umbrella company?

An umbrella company is a separate company that acts as an employer for contractors working on fixed term contracts. They also serve as an intermediary between the contractor and their end client or agency. The principle function of an umbrella company is to organise payment for the contractor. To do this they collect the contractor’s earnings from the end client or agency and then pay it onto the contractor with tax, national insurance and their umbrella company fee deducted.  

You can view our guide for more information about using an umbrella company. 

How does an umbrella company work?

There are a number of steps you will take when you work under an umbrella company:

Sign a contract with an umbrella company

The umbrella company will sign a contract with your recruitment agency. You will then sign an employment contract with the umbrella company and become an employee of the umbrella.

Submit your timesheet each week

As an umbrella employee, you will be required to submit a timesheet with information about all of the hours you have worked for along with any expenses to claim. Your umbrella company will invoice your agent/client for the work you have done and will receive funds for you from the agency.

Receive your wages

You receive your money after tax deductions, National Insurance contributions and an umbrella fee. Your umbrella company will send you a payslip as with permanent employment. Wages will be paid directly into your bank account regularly. 

Support from your umbrella company

For help and advice working under an umbrella company, our sister company can help. Parasol is on hand to provide you with you with support and answer your questions. For more information, please visit Parasol’s website or call on 0800 464 0379.

 

Call Back Request

Image CAPTCHA
Enter the characters shown in the image.

Speak to a
friendly expert
01442 275789

Monday to Thursday (8am to 8pm)

Friday (8am to 7pm)

Saturday (10am to 4pm)

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant face to face.
  • Money back service guarantee. All your Emails received by 4pm on any normal working day will be answered the same day. Should it be necessary to leave a telephone message it will be answered same day/following day latest or we will make a full refund of that months fee.
  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee starting from £120 plus VAT per month. Check our packages for more detail.

If you have any questions about contracting or would like any further advice please call our new business team on 01442 275789 or email: newbusiness@sjdaccountancy.com. Our new business team is open Monday to Thursday (8am to 8pm), Friday (8am to 7pm) and Saturday (10am to 4pm)

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.