PAYE Umbrella
Limited Company
Umbrella Plus

What is a PAYE Umbrella Company?

Whether you’re new to contracting or are an old hand, an umbrella company is an extremely simple option if you can’t face all the hassle, admin, tax issues and responsibility of running your own Ltd company.

An umbrella company is a normal limited company that acts as an employer on behalf of contingent workers (freelancers, independent contractors and consultants) who work on temporary contract assignments.

Brokers for umbrella company workers

Umbrella Service

An umbrella company takes care of all the administration like invoicing, chasing and collecting funds from your agency or end client and calculating your Tax and NI contributions at source.

The umbrella company provides a payroll service to its employees, processes all timesheets and invoices, and pays its employees a salary after allowing for deductions.

The contractor gets all the usual benefits of being a UK employee including holiday pay employers and employees pension contributions (these are part of the invoiced amount for the work you do), but you also get maternity, paternity and statutory sick pay.

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    How does a PAYE umbrella company work?

    Steps you will take if you join a UK-based PAYE umbrella company:

    1. Once you have secured a contract role, the umbrella company, as your ‘employer’ signs a contract with your recruitment agency and you sign a contract of employment with the umbrella company.
    2. You complete a timesheet on a monthly or weekly basis and send it to both your umbrella company and your recruitment agency.
    3. The umbrella company will invoice the recruitment agency, and the recruitment company will invoice the end client.
    4. Once the umbrella company receives payment, they pay your salary.

    When Your Umbrella Company processes your payroll, there will be deductions required to facilitate your employment. From the invoiced amount (This is not your salary): Employer’s National insurance, Administration contribution, Apprenticeship levy and Employer’s pension contribution. The rest will be your salary, from which the following deductions will be made: Employees NI, Tax, Employers national insurance, Employees pension contribution and Student loans.

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