Contractor Resource Centre

FAQs

What is an umbrella company?
An umbrella company is a business that provides the specialist services of its employees to end-user clients, usually via recruitment agencies, on a short term assignment basis. Read more…

Why do I need an Umbrella Company?
The simple answer is – to get paid! As you won’t be employed by the recruitment agency or client you have to come up with a way to pay your taxes and get money in your bank account. Read more…

An Umbrella Company told me…
All Umbrella Companies look at the top 10 claims being made by umbrella companies to entice contractors. Read more…

How should a Compliant Umbrella Company work?
The role of an umbrella company as developed by guidance from HMRC has become that of employer which means that the contractors who use their services are employed under a contract of employment and paid through PAYE. Read more…

What is IR35?
There is a great deal of information available on IR35 and most of it is pretty confusing so we’ll try to simplify things a bit for you. IR35 is only relevant if you work through your own Limited Company, if you work through an umbrella company, you can forget about it. Read more..

Contractor Expenses – Can you claim them?
The answer is – maybe. Read more…

How do I know if something is a tax avoidance scheme?
The basic rate of income tax in the UK is 20%. If you earn more than £35,001 a year, the tax rises to 40% and if you earn more than £150,000 it’s 45%. Also, for every £2 over £100,000 you earn you will lose £1 of your annual tax free allowance. On top of that, employee’s national insurance is payable at 12%. So, bearing all that in mind, how believable is an advert that says “Take home 90% of your income, 100% compliant”? Especially as the company offering the scheme will take a fee of around 5% of the contract value. Read more…

So why should I worry about Umbrella Company Compliance?
A popular contractor forum has dedicated an entire section to the fears and concerns of individuals who used the following tax avoidance schemes which are currently being investigated by HMRC. The schemes were labelled as ‘umbrella companies’ but were in fact EBT or loan schemes rather than compliant PAYE umbrella companies. Read more…

What if I use a non-compliant umbrella company?
We have some stories from real life contractors who are facing additional tax bills, plus penalties, plus interest because they worked through a non-compliant umbrella company. Read more…

Why do Take Home Pay calculations differ?
The simple answer is that they shouldn’t. All umbrella companies should operate PAYE which means that tax and national insurance contributions are taken as a percentage of earnings after certain allowances, all of which is determined by HMRC. The only difference will be the margin that the umbrella company retains (and the level of service you can expect to receive). Read more…

Take Home Pay: Claims vs Reality
Well, if you believe what you read on the internet, anything up to 91% of your earnings. Hooray I hear you cry, that’s wonderful! Unfortunately HMRC wouldn’t agree and if they come to discuss it with you, you probably won’t see your umbrella provider for dust and you will probably be saddled with a very large tax bill. Read more…

Contractors Up The Creek
How would you feel if a single decision you made about your finances could lose you your home, your family or worse still drive you to suicide? This is no exaggeration. Read more…

When is an umbrella not an umbrella?
If you read the tabloids, watch current affairs programmes or have an association with certain Trades Unions, you will no doubt have seen the term ‘umbrella company’ bandied about quite a lot just lately and not exactly in a glowing light.  UCATT have declared that umbrella companies are ‘exploiting’ construction workers; The Mirror claimed that they are a ‘ploy concocted to rip-off construction workers’ and the Dispatches programme [19th January] dedicated much of their time to umbrella companies paying below minimum wage. Read more…