UC Contractors

frequently asked questions

Not usually. A visa can only be sponsored by the end client – that is, the company the skilled worker will be performing work or completing an assignment for. They will offer employment and a guarantee.

No. Umbrella companies often work hand in hand with recruitment agencies, but ultimately the umbrella company’s role is employing and ensuring the contractor gets paid for the work they perform, not to find the work.

Yes! An umbrella company operates payroll in the same way any other UK company would (via PAYE), so income tax and National Insurance is all taken care of on your behalf. You can see this all broken down on your payslip.

It depends. Ordinarily, all taxes are taken care of by your umbrella company as you’re their employee, but if you have any additional income streams or you’re listed as a company director then you’ll likely have to file one. Also if you have any legitimate expenses that you want to claim, you can do with your Self-Assessment.

The simple answer is they have to! All employers, including Umbrella Companies, are obliged to pay Employers’ NI. Umbrella Company margins are far too fine to pay employers NI on a contractor’s earnings and, as such, this amount is typically factored in to a contract rate. It may look as though it comes out of your pay packet, but ultimately the end client pays for it.

Yes! As an employee, you’re entitled to all the same statutory rights as an employee of any other company. This can be accrued or held back for when you choose to take time out, or you can choose to have it advanced to you with your salary payment. This will be discussed with you before you sign our contract.

Yes! As an employee, you’re entitled to all the same statutory rights as an employee of any other company. Just let us know!

Yes! As an employee, you’re entitled to all the same statutory rights as an employee of any other company. Eligible workers must have worked continuously for at least 26 weeks with the company.

Unfortunately, the name of the umbrella company has been tarnished by disreputable organisations using the label for their tax avoidance schemes. Avoid any ‘enhanced’ or ‘tax planning’ umbrella company that claims to give you higher take home pay.

Recruitment agencies often have an approved supplier list of umbrella companies they’re partnered with, and will usually insist you use those. If you’re an independent contractor, however, the world of umbrella companies is your oyster!

As an employee of a reputable umbrella company, you’ll be employed as a PAYE employee. If an umbrella company claims to pay you more than PAYE, steer clear! It’s likely a tax avoidance scheme. The only difference should be the umbrella margin which may differ between companies.

A contractor, like a freelancer, is essentially a skilled worker who completes tasks or jobs for various companies and organisations on short term contracts, as opposed to working for just one on a long term/permanent basis.

An umbrella company provides employment for a contractor and performs payroll function. An individual can be employed by an umbrella company and operate as an on-payroll employee while still fulfilling multiple contracts/assignments.

For the purposes of tax, no. You’re an employee of an umbrella company. In terms of your choice of roles, however, you’re free to operate in the same way as any self-employed worker would. You can choose assignments that suit you and take time out when you want. We’re here when you need us.

Umbrella Companies are widely known to be unregulated. Organisations such as Professional Passport, ERA Services and FCSA conduct audits based on compliance standards, but there is no official regulatory body for umbrellas at the moment. We are currently certified by Professional Passport as we deemed their model to be the most comprehensive in the industry.

It may be easier to identify if they are non-compliant.

  • Any notion of pay elevated beyond PAYE = non-compliant
  • If they don’t provide you with a contract of employment that details employee rights = non-compliant
  • If they’re registered offshore, be careful, they may not be 100% non-compliant but it may be worth asking a question as to why they don’t have a UK registered address.

In a broad sense, any self-employed contractor or freelancer can use an umbrella company – it’s a way of keeping yourself tax compliant without having to worry or deal with admin involved in taxes, etc. However a person will HAVE to use an umbrella company (or go permanent) if they’re considered to be “inside IR35” and performing the tasks of a normal pay-rolled employee.

You have flexibility and choice in your assignment selection, you’re not tied down to one end-client. You can enjoy the lifestyle of working for yourself while retaining full employee rights. Plus, you don’t to worry about organising tax returns; this means you can get on with the job you’re great at.

A mini umbrella company is one that, instead of operating as a single organisation, sets up multiple small limited companies – to the order of hundreds or even thousands – in order to reduce PAYE, National Insurance and VAT, or even skirt them altogether. Ultimately, this is fraud and can impact the contractor and the supply chain.

Look out for offers of a higher rate of take-home pay, split payments with mention of ‘advances, loans or annuity payments’. Compliant umbrella companies will ensure you keep the highest rate of take-home pay allowed under tax law – any umbrella company claiming to give you more than this will most likely be using a tax avoidance scheme to achieve it.

Yes! You can operate as any freelancer or self-employed worker would and take on as many contracts as you can handle.

To be “inside IR35” means that the contract has been assessed and the role is considered to fit that of an ‘employee’ for the purposes of tax. Therefore, an individual cannot be paid to their limited company but must be paid PAYE as an employee, either by the recruitment agency or umbrella company.

To be “outside IR35” means to that the contract has been considered to fit a self-employed worker for the purposes of tax (i.e. you’re not an employee, you’re responsible for your own tax affairs), as dictated by IR35 legislation. You can be paid to your limited company if you fall outside IR35.

Yes! An umbrella company is your employer, and as such will pay contributions to your pension pot just as any other employer would. There is auto enrolment to NEST which you can opt out of if you choose, and we can also pay to your private pension as a form of salary sacrifice. Just ask.

The WTR was put in place to protect workers and simply put, an employee is to work no more than an average of 48 hours per week over a 17-week period. If you think that your job role will take you over these hours and you wish to opt out of the WTR, you can do so by signing the document with your contract of employment. Should you not opt out right now and circumstances change, we will be in contact to see if you need the opt-out document.

  • We have a quick chat, explain things and answer any questions.
  • You complete our application form, provide ID, proof of address and evidence of Right to Work in the UK
  • We check everything and send you a contract of employment to sign (electronically)
  • We set up an agreement with your agency/end client
  • You complete the work for the end client
  • The end client pays the recruitment agency
  • The agency sends funds to the umbrella
  • Umbrella income received is processed with our fee, Employers NI and pension deducted
  • The remaining amount is processed as your salary and calculated for Tax and NI deductions
  • You receive an SMS notifying you that money has been processed
  • You can access your payslip and Pay Statement on your secure portal
  • We report and pay funds to HMRC and NEST