What is an umbrella company?

The True Definition of a PAYE 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. Adding value to the UK’s flexible workforce, umbrella employees normally have specialist skills and experience that are desirable to any business with project based work or with a requirement to scale up and down quickly. Whilst umbrella company employees may work on a number of temporary assignments for a range of different clients their employment relationship with the umbrella company is continuous. Both parties are bound by the terms of the contract for its duration with notice required from either party to terminate the arrangement. By virtue of the contractual arrangement the umbrella company will meet all Statutory Employer obligations and will deduct PAYE taxes from its employees. Employer’s NI will be paid to HMRC with the PAYE deductions from employees and reported to HMRC via RTI. The umbrella will retain nothing from the contract value, for its own gain, other than a stated margin.”

All true umbrella’s should operate in exactly the same way, there should be no ploys to get you on board. There should be no guarantees of take home as this is all dependent on your circumstances. However, any company should be able to talk you through how they operate. They should be able to explain any nuances in your take home and set your mind at ease.

If your brolly is unable to explain the calculations down to the last penny, then seriously think about who it is you are looking to trust your money with.