What Exactly Are PAYE Umbrella Companies?
The best way to understand a PAYE umbrella company is to see it as an intermediary company that sits in between you, the contractor and your clients. The main reason for doing this is so that it can handle all of the annoying admin that comes with contracting, such as dealing with invoices, managing payroll and sorting out taxes. By taking over this kind of stuff an umbrella company frees you up to do more of what you actually enjoy doing and stops you having to worry about the stuff you hate doing.
In addition, it takes away any worries about tax by taking over the handling of payment for your work. Your clients will pay the umbrella company for the work you do and your umbrella will then process the payment before passing it back to you.
Whats covered in this Article
- Umbrella Companies
- What Exactly Are PAYE Umbrella Companies?
- Find the Best UK Umbrella Quickly
- Free Companrison of UK Umbrella companies
- What do UK Umbrella companies do?
- So I Would Be Working for the Umbrella Company?
- Does That Mean I Can No Longer Claim Expenses?
- Is IR35 An Issue?
- Ok, Sounds Good. How Does It Actually Work Then?
- How Umbrella Contractors Can Still Claim for Travel and Subsistence
- The HMRC Umbrella Company
- How To Find The Best Umbrella Company
- What should you expect from an Umbrella
- What do HMRC think of Umbrella Companies
- Umbrella company vs paye
- Limited Company VS Umbrella Company – Making an aware choice
- What is an Umbrella Company
- What Expenses you can Claim through an Umbrella Company
- What is Travel and Subsistence
- Best Umbrella Company – 9 Tips for Contractors to Choose
- whats the best umbrella company in Hastings?
Find the Best UK Umbrella Quickly
Free Companrison of UK Umbrella companies
What do UK Umbrella companies do?
- 1. handle the invoicing of the client
- 2. handle the invoicing of the client
- 3. sort your taxes out
- 4. Pay you
So I Would Be Working for the Umbrella Company?
In a way, yes. You still get all the freedoms that come with contracting for yourself, managing your working life and picking and choosing your clients with no boss to answer to, but at the same time you also technically become an ‘employee’ of your umbrella company. Once you are an employee you will then earn money via PAYE and pay National Insurance contributions, all of which will be handled by the umbrella. And consequently you will never have to deal with HMRC again, nor have to worry about any invoices or chasing clients for money.
Does That Mean I Can No Longer Claim Expenses?
Not at all, no. As with working as a limited company contractor, it is also possible to maximise your income through expenses when working for an umbrella company. To give one example, as you will be working under an employee / employer structure and will be working at numerous different locations, each of these locations will be classed as a ‘temporary workplace’ and this means that you are allowed to offset your travel and subsistence expenses for getting to the site and home again as well as any expenses incurred whilst at the site.
Is IR35 An Issue?
Here’s the good bit – IR35, the legislation that causes most contractors to wake up at night in a cold sweat, becomes completely irrelevant once you sign up to an umbrella company. If you’re working for a PAYE umbrella then you are paying the right amount of PAYE and NIC’s and are therefore not affected by IR35.
Ok, Sounds Good. How Does It Actually Work Then?
It’s incredibly simple. Sign up with an UK based umbrella company and they will get you to sign an employment contract. Then you just carry on working contracts as normal, the only difference being that you and your client will sign a timesheet which is then passed back to your umbrella . They then invoice the client and once the client pays, they deduct your tax and NIC’s and then pay you. And that’s it!
The issue around umbrella companies and expenses has long been a contentious one between HMRC and the contracting sector and it remains so to this day, particularly when it comes to travel and subsistence. In this article we will take a brief look at the changes to...
Ask any contractor for their opinion on what HMRC thinks of contractors and they will probably scoff, laugh out loud or start to pace and rant incoherently. It’s safe to say that contractors have not been feeling the love from HMRC for a long time now and a reading of...
Thanks to the constant stream of legislation out of HMRC relating to the way contractors work there are now only two realistic options open to contractors for managing their income – working via their own limited company or working via an umbrella company. Both have...
An umbrella company helps you to increase your take home pay while paying full income tax and staying under the law of UK. The umbrella solution becomes popular after the implementation of new tax known as IR35 in 1999. Later changes in HMRC guidelines discouraged...
When you're contracting, you have to make sure that you're aware of truth and facts when it comes to umbrella companies. It is easy to lose track when selecting umbrella company because you will be looking at many PAYE umbrella payroll companies offering expenses...
If you have made a decision that running your contracting business as a limited isn't really for you, you may think about choosing an umbrella company for contractors. Additionally, there are some employment agencies that might process the value of your contract...
If you are going to leave permanent employment to start contracting or freelancing, you need to look for your options. In the UK, you can set your own limited company or you can work via an umbrella payroll service. Both solutions have their positive and negative...
The short and simple answer is that a PAYE umbrella company is a company that serves as an intermediary company between a contractor and his or her other clients (who will either be employers or agencies.) Why does it do this? What is its purpose? Basically, the whole...
Since this page was written there have been some crucial changes. It is important to note that as of the 6th April 2016, changes in legislation (as part of the Finance Act 2016) mean that it will not be possible for a compliant...
Tax Relief on Travel and Subsistence Explained. A brief look at potential problems (and solutions) for Umbrella Contractors who want to explore tax relief on business travel and subsistence expenses. Tax relief on travel & subsistence expenses has been the cause...
Most of the time a PAYE Umbrella Company is the right solution for a contractor looking to spend few months contracting. Similarly, the contractors within IR35 should also opt for Umbrella Company instead of forming a limited company of their own. Umbrella Companies...
An umbrella company is not just helping your business they also offer a number of methods for you to focus on your business. With these services, you can take your mind off the things that need to be done, and onto the things that you actually want to do. Umbrella...