Umbrella - FAQs
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 main function of an Umbrella company is to arrange 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 after deducting tax, National Insurance and the Umbrella company fee.
STEP 1: You join and become employee of Umbrella company
STEP 2: You send weekly timesheets to us via the portal
STEP 3: We will invoice the agency or client you work for
STEP 4: We will receive funds from them
STEP 5: We will pay you directly, less the weekly fee and any tax and NIC deductions
If you earn less than £25,000 or you are on a short contract and don’t intend to stay contracting for long, an Umbrella may be the best option for you. Although you may take home less than you would through a limited company, many contractors opt for the simplicity of working under an Umbrella.
No, if your only income in any particular tax year is paid through an Umbrella company, then all tax has been deducted at source and you would not need to complete a self-assessment.
However, you would have to complete one if you have other untaxed income, or HMRC send you one for completion.
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