Working as an Umbrella contractor is relatively straight-forward, but there are a number of compliance issues you should be aware of.
Your Umbrella company should take care of a majority of compliance issues, ensuring you pay the correct tax and National Insurance in line with HMRC’s rules. This is why it’s so important to choose a compliant, FCSA-accredited company, like our parent company, JSA. We work closely with our colleagues at JSA to support contractors who want or need to choose this working option, or who need to switch from limited company (PSC) contracting to Umbrella employment in response to the off-payroll legislative reforms.
Unfortunately, not all Umbrella companies adhere to the same high standards and while some Umbrella companies may make themselves look more appealing by enhancing some contractors’ take-home pay, they put contractors at risk of severe penalties.
Compliance Issues for Umbrella contractors
Paying the correct tax
Non-compliant Umbrellas often offer ‘loan schemes’ or ‘investment opportunities’ which ultimately mean you don’t pay the correct amount of tax. If you don’t work compliantly and get caught by HMRC, you could have to pay back the tax you owe on top of significant penalties. Tax avoidance is a criminal offence.
One of the benefits of Umbrella working is that it does entitle you to the same employment rights as an employee including holiday pay, sick pay, access to a pension scheme, a record of continuous employment as well as paid leave. If you choose a non-compliant Umbrella company, these benefits may not be available to you.
Choosing a compliant Umbrella company
As an FCSA-approved Umbrella company, our parent company JSA will help you get the best take-home pay whilst ensuring you work compliantly. The team is happy to talk to you about Umbrella contracting and how it works and will provide detailed pay illustrations too.
What to do next
If you would like to find out more about Umbrella contracting, please download our free guide, or get in touch to speak to a member of our team who will be pleased to help. If you think you will be affected by the forthcoming off-payroll rule changes, we can provide advice and guidance on your individual circumstances to help you navigate the reforms.