Umbrella services

An umbrella company allows agency workers to engage in temporary contracts in a compliant and hassle-free way. You will become an employee of the Umbrella Company and will work under an employment contract. ​ The umbrella company then contracts out your services to the recruitment agency/client. In 2021, the Off-Payroll Working Rules were also reformed, making this an even more complicated area to navigate, and an experienced umbrella company can help you to adjust your setup to account for this. For many contractors, umbrella companies are a way to protect your IR35 status, so that you can avoid exposure to the complex and costly rules put in place by IR35 legislation.

An umbrella rate or umbrella income is subject to statutory employer deductions, these include National Insurance, Apprenticeship levy and any workplace pension deductions (if applicable). The umbrella company will also charge a fee for the processing of your timesheets. Once these have been deducted, you will see your weekly gross earnings. Your gross earnings are then subject to statutory employee deduction: ​ PAYE Tax and National Insurance Pension contributions Student/Postgraduate Loans, Child maintenance As an employee of the umbrella company, you are still legally entitled to your tax-free personal allowance and holiday pay.

Full-time employees in the UK are entitled to 5.6 weeks of paid holiday leave each year, equal to 28 days for those who work five or more days a week. This is inclusive of public holidays. If you work less than full-time equivalent hours under an umbrella company, your paid leave entitlement will be adjusted accordingly. You can have holiday pay in the form of accrual or credit. Accrual means that we as the employer will withhold your holiday pay, and use these funds to pay you when you do take time off. Credit means that you will be paid your holiday pay in advance for each day that it is accrued, meaning that you manage your finances accordingly, and will not receive any pay when you take leave.

​Contractors work very different schedules, ranging from just a few hours per week to a more than full-time commitment. This makes it difficult to compare contractor salaries directly, without adjusting them to take into account the number of hours worked and the hourly rate of pay. Because of this, it's normal to calculate a pro-rata salary, equivalent to the weekly or annual earnings of a full-time employee - we'll look at this in detail below.

A 'pro rata' salary accounts for the difference between the number of hours you work as a contractor, and the number of hours a full-time employee would work. For example, if you work 30 hours a week, your earnings will be 75% of a full-time equivalent (FTE) salary based on a 40-hour full-time working week. You can think of it as your hourly contractor rate, multiplied by 40 for a weekly FTE salary. You can then multiply the result by 52 to get an annual FTE salary. The simple formula for this is: ​ Weekly FTE salary = 40 x Contractor earnings per week/number of hours worked per week ​ Annual FTE salary = 52 x Weekly FTE salary

We are! Our Umbrella offering is Professional Passport accredited. We are also in the process of gaining further accreditations so watch this space!