Umbrella companies are often portrayed as being confusing and complicated. However, this is far from the truth and if you keep reading, you’ll confidentially be able to answer the question – “how do umbrella companies work?”
The umbrella enters into an overarching contract
Basically, when you work, your end client pays your recruitment agency your funds, they transfer these to the umbrella company, the umbrella company makes the appropriate deductions (as discussed below) and you are then officially paid. This may sound complicated but it really isn’t. The umbrella company has the sole purpose of paying you the money you have earned.
Registering with an Umbrella Company should be easy
Signing up to the services of an umbrella company should not take you long at all. In fact, you should be able to complete the whole process in 10-20 minutes. Most reliable umbrella companies will ask you to complete a comprehensive form, as we as provide proof of identification.
The umbrella becomes your employer (technically)
Once you register with an umbrella company for your payroll, they will become your employer and you will receive PAYE – just like somebody who is employed full-time. The umbrella will pay you minus deductions, including tax, National Insurance, their margin. You will be sent a payslip – just like an employee in a permanent position.
PAYE means all umbrella companies should offer you the same take home pay
As mentioned above, you will receive PAYE. Umbrella companies must follow HMRC rules and regulations and as a result, they are not legally allowed to pay you more money. If you have seen companies offering you the chance to keep 90 percent of your take home pay – run a mile! These are tax avoidance schemes and HMRC could retrospectively devastate you by reclaiming underpaid tax and issuing fines.
You won’t have to worry about much administration
In order to receive your payment in time, you will need to have submitted your signed timesheets to your end client, as well as send a copy to your umbrella company. This way, both the end client and the umbrella can prepare your money.
Some umbrella offer more than just payroll
Paying a margin each week/month to receive your pay may sound like a bad deal. However, some umbrella companies offer far more than just sending you your pay. Let’s have a look at what you can benefit from when you choose Churchill Knight Umbrella as your provider:
- Free insurance cover worth £25 million so that you can work with complete peace of mind.
- Access to Churchill Knight Rewards – our exclusive employee reward scheme that will allow you to save significant funds when shopping online, visiting the high-street, eating at your favourite chains, visiting much-loved attractions, and more!
- Same Day Faster Payments, meaning you won’t need to worry about whether or not you’ll be paid on time.
- No hidden fees – there are no hidden fees when you join us and you’ll not have to worry about joining or leaving charges. Only pay our margin when you use our service.
- You are entitled to Employee Benefits, including Sick Pay, Maternity Pay, Paternity Pay and Holiday Pay (just like permanent employees).
- And more!
How do Umbrella Companies Work?
If you would like to discuss your payroll, please call our friendly team today on 01707 871622 or use the short form on this page to send us your queries. If you still have any questions about how umbrella companies work – we’d be happy to help.