There are many Umbrella Companies on the market and they are not all created equal. With such a large number to choose from, it’s important you do your research and make a well-informed choice to make sure your contracting experience is as straightforward as possible. When vetting an Umbrella Company, it’s vital to consider the following:
Compliance. This is the big one! Umbrella companies are employers and all must calculate your pay in the same way. If they’re promising 80% or more take-home pay, they’re probably taking liberties with your payment calculations. Although it’s tempting in the short-term, using a non-compliant scheme puts you at risk of HMRC investigation in the future.
HMRC never approve an Umbrella company, so “HMRC approved” on a website is nothing more than marketing. Always look for badges of compliance on an Umbrella’s website – and remember, “if it looks too good to be true – it probably is!” Check out our guide to tax avoidance schemes for more information.
Transparency. Any Umbrella company worth their salt will provide you with a bespoke pay illustration before you commit, with all costs clearly laid out. When you are paid, they should give you a full breakdown of your payment calculation (with employer-side deductions) as well as your own payslip. Watch out – if an Umbrella doesn’t do this, it’s possible they will have hidden costs or extra deductions.
It’s also worth inquiring about additional costs. An Umbrella might advertise a rock-bottom margin, but rack up hidden costs – fees for same-day payments, providing a reference or even issuing your P45 at the end of the contract!
Reputation. How long has the Umbrella been established? Have they won awards? How many contractors choose to work through them? What do other freelancers say about their experience with the Umbrella? Although small or newly-established Umbrellas can give a good experience, but it’s a risk – picking a big name in the market is a guarantee that you are in safe hands.
Service. The best Umbrella companies have a dedicated support team, always available by phone and quick to respond by emails. After all, if you have a query with your pay, it’s no use signing up to an Umbrella who you can’t reach by phone or who take two days to respond to your emails! Some Umbrellas even give you a dedicated staff member who will be your first point of contact for anything you might need.
Look out for independent awards and commendations on the Umbrella’s website. It’s also worth speaking to other contractors to find out their experiences – many will have both good and bad experiences with Umbrellas and their feedback can be invaluable.