Umbrella companies are a popular method of payroll for nurses and healthcare professionals working on temporary assignments (inside IR35). However, before registering with an umbrella company, it’s important to understand how they work and what the benefits are when you engage with a compliant umbrella. In this article, we’ve focused on 5 tips for nurses and healthcare professionals when searching for an umbrella company.

Understanding how compliant umbrella companies operate

Understanding how compliant umbrella companies work is essential before you register with one. With so many to choose from, understanding the processes of registering, onboarding and getting paid is vital. It’ll allow you to identify whether the umbrella is processing PAYE compliantly or if they’re potentially operating a tax avoidance scheme.

When you register with an umbrella company for payroll purposes, you become an employee of that umbrella company. You will continue to work for your end-hirer, but your assignment rate will be passed down the supply chain to the umbrella. The umbrella will then make all the legal PAYE deductions before transferring your net salary to your personal bank account. Your umbrella will provide you with a payslip each time you are paid.

Churchill Knight Umbrella is certified by SafeRec, which adds an extra layer of protection for all our umbrella employees. When you register with us, every time we process your payroll, you’ll have access to a payslip audit report (provided by Payslip Buddy), which will examine all the deductions and provide clarity that you’ve been paid correctly and legally. We’ll pay you compliantly and provide you with proof.

For more information, please read our guide – How does an umbrella company work?

Once you have completed the onboarding process with your umbrella, you’ll be set up and ready to be paid. Depending on your recruitment agency’s processes, you may be required to submit timesheets to them and your umbrella. Churchill Knight Umbrella is partnered with My Digital – a leading umbrella software specialist. If you need to upload timesheets to us to get paid, you’ll have access to an easy-to-use online portal powered by My Digital, and we will email you the information you need once you complete the onboarding process.

IR35

One area of confusion with umbrella companies is IR35 legislation. Umbrella companies are the best payroll solution when nurses or healthcare professionals work on assignments inside IR35 – as they operate Pay As You Earn (PAYE). If you work on assignments outside IR35, you may be able to contract through a personal service company (PSC) and engaging with a specialist contractor accountant may be a preferred alternative.

When you use an umbrella, you’ll be paid as an employee (PAYE), meaning you do not need to worry about IR35 because you are being paid compliantly. Every time you accept a new temporary nursing or healthcare assignment, your end-hirer should provide a Status Determination Statement (IR35 review) for that particular role. If the role is deemed inside IR35, you will usually be required to register with an umbrella company. Umbrella companies will not issue IR35 assessments.

We have written guides about IR35 in the public sector and public sector that you may find useful.

HMRC guidance

Over the past couple of years, HMRC has released several pieces of guidance to help temporary workers understand umbrella companies and how they should be processing payroll. HMRC has also created guides for members of the supply chain, including recruitment agencies (such as ‘Check how to reduce your risk of using an umbrella company who operates a tax avoidance scheme’).

Before joining an umbrella company, we recommend you read the guidance on the government’s website. Here are some of the guides that you will find helpful:

Benefits

As an employee of an umbrella company, you are entitled to employee benefits. For example, when you join Churchill Knight Umbrella, you will have access to:

  • Employee benefits, including Statutory Sick Pay and Maternity/Paternity Pay.
  • Continuity of employment – meaning you can use Churchill Knight Umbrella for all your temporary assignments without needing to switch to another umbrella company. Continuity of employment is also helpful when seeking finance, such as a loan or mortgage, because you will have the same employer for all your temporary assignments.
  • Same Day Faster Payments – ensuring you’re paid on the same day we receive your funds.
  • Comprehensive insurance coverage – £10 million Employers Liability Insurance, £10 million Public Liability Insurance and £5 million Professional Indemnity Insurance.
  • Salary sacrifice – Let us know if you are interested in tax-efficiently boosting your personal pension pot with salary sacrifice, and we can help you get this set up.
  • Easy registration – We’ve streamlined our registration process to ensure it’s as easy as possible. You can register online or over the phone.
  • Comprehensive onboarding – Our in-house Onboarding Department will help you complete registration and get set up and ready to be paid. If you have any questions along the way, the team is always on hand to assist you via the phone or email.
  • Churchill Knight Rewards – We have a special employee reward scheme (opt-in required) that will provide you with access to a 24/7 GP hotline, a special BP fuel card, discounts when eating out, reductions with your favourite online retailers, cheaper supermarket shops, and more!

Check the online reviews for an umbrella company

Reading online reviews is an excellent way to gauge how an umbrella company performs for contractors and freelancers. Look at the leading review platforms such as Google and Trustpilot to see what real healthcare professionals are saying about the umbrella. However, be careful and read a handful of reviews carefully. There could be misleading reasons why someone has left an umbrella a positive 5 star review. For example, a worker may be praising an umbrella for providing them with extra-high take-home pay – which could be an indicator that the umbrella is not processing payroll compliantly.

Churchill Knight is delighted to have hundreds of genuine 5 star reviews from previous and live contractors using our leading payroll service. Our Google score is 4.4/5.0, and our Trustpilot score is 4.8/5.0.*

Are they accredited by reputable bodies?

There are tens of thousands of nurses and healthcare professionals in the UK using the services of an umbrella company. Therefore, it’s essential that if you work in healthcare, you are familiar with three most recognised self-regularly bodies in the umbrella company sector.

The Freelancer and Contractor Services Association (FCSA)

The FCSA is the UK’s leading professional body committed to ensuring the supply chain of temporary workers is compliant with HMRC’s rules and regulations. To obtain FCSA accreditation, umbrella companies undergo a series of audits and assessments to ensure they abide by the highest compliance standards and process payroll legally and ethically.

Churchill Knight Umbrella is proud to be an accredited member of the FCSA and you can see our official directory listing here.

SafeRec

While relatively new in the sector, SafeRec has taken the umbrella industry by providing new transparency levels for temporary workers and recruitment agencies.

Registering with a SafeRec certified umbrella company gives you access to payslip audits every time you are paid. These audits will clarify your payment and check that every deduction aligns with UK tax law and that no signs of unethical activity have occurred.

Churchill Knight Umbrella is delighted to be one of the few umbrella companies with FCSA accreditation and SafeRec certification.

Professional Passport

Professional Passport is “the largest independent assessor of payment intermediary compliance” and “the only insurance backed accreditation so we can always stand by our word”. There are currently over 70 Professional Passport accredited members, and you can see this list here.

Do they follow all the legal procedures when onboarding new workers?

Registering with an umbrella company will take roughly 10 to 15 minutes and will require you to share a lot of personal information, including:

  • Full name
  • Date of birth
  • Address
  • Contact information, including phone number and email address
  • National Insurance Number
  • Assignment details
  • Bank details

As part of the onboarding process, you will also need to send your latest P45 to your umbrella which will ensure you are put on the correct tax code. If you don’t have a P45 – don’t worry. There is a government form (Starter Checklist for PAYE) that you can complete online.

Before you can be paid by an umbrella, you will need to provide proof of your identity. If you are not a UK national, you will also need to provide proof of your Right to Work (RTW) in the UK. Umbrella companies cannot legally process your payroll without this information.

Familiarise yourself with the signs of a non-compliant umbrella company and understand the risks of engaging with them

Unfortunately, while a majority of umbrella companies process PAYE compliantly and in accordance with HMRC’s rules and regulations, a few have given the sector a bad name.

HMRC continues to step up its efforts to identify and punish the people behind non-compliant payroll services (non-compliant umbrella companies, often referred to as tax avoidance schemes) and the professionals who engage with them. Therefore, any temporary worker who has used a tax avoidance scheme in the past may receive a letter from HMRC in the future demanding payment of alleged unpaid taxes and national insurance contributions.

Here are some of the obvious signs a payroll company is operating non-compliantly:

  • They do not operate Pay As You Earn (PAYE).
  • They advertise ways for you to maximise your pay and pay less tax and/or national insurance contributions. It’s common for non-compliant payroll providers to promote take-home pay retention as high as 90%.
  • They claim to be “HMRC compliant” or “fully legal”.
  • They do not have much information on their website and have a very streamlined site, often with only a couple of pages.
  • They are not located within the United Kingdom.
  • They are backed by directors with little trading history, often located outside the United Kingdom in well-known tax havens such as the Philippines or Isle of Man.
  • They offer to pay gross payments into limited companies – something that is non-compliant as umbrella employees should be paid their net salary (after deductions) into a personal bank account.
  • They have been issued a Scheme Reference Number (SRN) by HMRC, meaning they’re under investigation for potentially processing payroll non-compliantly.

If you believe you may have used the services of a tax avoidance scheme in the past, or you may be doing so currently, HMRC urges you to contact them to settle your tax affairs. More information is available here.

Request a free take-home pay calculation from Churchill Knight Umbrella

As one of the leading UK-based umbrella companies, we take compliance extremely seriously. To prove our commitment to compliance, we’re proud to be an accredited member of the Freelancer and Contractor Services Association (FCSA). We’re also certified by SafeRec, an AI-powered software provider that has revolutionised compliance and transparency in the umbrella company marketplace.

We compliantly process payroll for hundreds of nurses and healthcare professionals every week. To request a free, tailored take-home pay calculation from our Sales Professionals, please complete the short form here or call our team on 01707 871622.

 

*Accurate on 10/12/2024.