Umbrella Company

What is an umbrella Company?

An Umbrella Company work in the same was as being paid PAYE with Bromak. (See PAYE Section) Contractors paid in this way will need to register with an Umbrella Company of their choice if they are not already set up with one.   

When being paid on this basis, the contractor will be classed as an ‘employee’ of the Umbrella Company and will be paid basic pay of Hours Worked x Hourly Rate.

The Umbrella Company is viewed as providing the services and the individual is a representative of the company.

The individual will pay a weekly fee to the company of approximately £10 - £25 per week and will have deductions of National Insurance and Income Tax made at source.

What are the benefits of using an Umbrella Company?

The benefit to contractors of using an Umbrella Service is that Business Expenses can be re claimed against the candidate’s income Tax liability.

The candidate’s Umbrella Company will provide expense forms that can be used for claiming back costs incurred during your work.  These include petrol/mileage, equipment hire, meals, safety equipment etc.

 It must be noted that these costs will not be paid back to the candidate, but will be used to lower the amount of tax that has to be paid.

For example a contractor earning £200.00 per week before tax who had £50 of expenses would only have to pay tax on £150 of his earnings not £200.

The tax savings for a contractor on an hourly rate of £10ph + can be substantial and they can be set up very quickly over the phone in most instances.

Further information and illustrations of what you could be earning by working under any of the above schemes can be provided by calling our payroll department on 01204 554880.