Five benefits of using an umbrella company

Umbrella companies offer a compliant payroll service (PAYE) for contractors. They are very flexible and can be used at any stage of your contracting career – and for any length of assignment. Continue reading to discover the five key benefits of working via an umbrella company.

1. You do not need to worry about IR35

IR35 has recently been a topic because changes have recently impacted the private sector. Since April 2021, contractors working in the private sector are not allowed to decide their IR35 status. This responsibility has been passed to the end-client (assuming they’re classed as a medium or large organisation). This change is commonly referred to as off-payroll working in the private sector, and similar changes were introduced into the public sector in 2017.

Contracting outside IR35 with a personal service company is still the best way to maximise pay retention legally. However, there are more advantages to using an umbrella company than you may think. Firstly, you can forget about IR35 and the implications of paying the wrong amount of tax and National Insurance Contributions (NIC). By engaging with an umbrella, you become their employee, and you’ll receive PAYE. This means that all the appropriate deductions (including tax and NIC) are sent to HMRC by the umbrella. You never have to worry about underpaying your tax when you use a compliant umbrella company.

2. Hassle-free contracting

Umbrella companies are often regarded as the easiest way to operate and get paid as a contractor. They offer a completely hands-off approach to contracting as the umbrella company will take care of all your invoicing, administration, chasing payments and processing your payroll. Apart from submitting your weekly/monthly timesheet, you don’t need to concern yourself with any paperwork or admin (once registered), such as dealing with Companies House or HMRC.

Umbrella companies are also a great way to dip your toe into contracting if you are unsure whether you would like to pursue contract work long-term. There are no financial demands and no-tie in period – you can use an umbrella company as and when you need it. This is also an ideal solution if you work on shorter contracts here and there or are between permanent work.

3. Continuity of employment

When you register with an umbrella company, you become an employee of theirs and benefit from continuity of employment. This is particularly beneficial if you are working on multiple contracts alongside each other. You will still be seen as one employee of the umbrella company, and your tax code won’t be negatively affected.

Continuity of employment is really useful for contractors and freelancers who are looking to source finance from a bank – such as a mortgage or loan. Many lenders will be favourable to workers with continuity of employment because having one employee over a long period of time shows consistency.

4. Workplace Pension Enrolment and Salary Sacrifice

Automatic Workplace Pension Enrolment

Umbrella companies are legally required to enrol you into a pension after 12 weeks. Don’t worry; if you have an existing pension scheme in place or are not interested in continuing with the workplace pension scheme with your umbrella company, you can opt out.

Workplace pensions are a great way to save for retirement and offer many benefits; these include but are not limited to:

• The money is automatically paid into your pension pot each time the umbrella company pays you
• You can increase your retirement income beyond your state pension
• It is a hassle-free way to grow your pension as the pension provider will take care of everything for you, and a lot of people don’t notice they are paying into a pension as it is a small amount each month

Salary Sacrifice

Salary sacrifice is a great way to boost your pension pot. It allows you to allocate a percentage of your pre-tax earnings towards your pension. Plus, contributions to your pension are not subject to tax, and National Insurance making salary sacrifice an extremely tax-efficient way to save for the future.  Salary sacrifice is particularly beneficial if:

• You’re a high-earner
• You want to grow your pension pot quickly
• You have additional sources of income
• You’re happy to see your monthly pay retention decrease as you’ll be allocating more of it towards your pension

If you would like to find out more information about salary sacrifice with Churchill Knight Umbrella, or you’d like a tailored take home pay calculation, please give our team a call on 01707 871622.

5. Little extras to provide better value

Every compliant UK-based umbrella company will provide you with a PAYE payroll service. However, they won’t all go the extra mile and offer little extras to provide better value. We’ve summarised some of the extras you will get when you register with our payroll service:

• Same Day Faster Payment – We will process your pay and have it in your account the same day we have received it from your agency or client. Not all umbrella companies operate Same Day Faster Payments, and some use BACS instead – which can take 3-5 days to process.
• Access to My Digital – A state-of-the-art online portal and mobile app that makes submitting your timesheets and viewing payslips easier than ever before.
• Employee benefits – You will be entitled to Statutory Benefits, including Sick Pay and Maternity/Paternity Pay.
• Free insurance cover – All of our clients are protected with £10 million Public Liability Insurance, £10 million Employers Liability Insurance and £5 million Professional Indemnity Insurance.
• Referral rewards – You can refer a friend or colleague to our accountancy or umbrella service and earn exciting referral rewards.

Are you looking for a compliant umbrella company?

If you’re considering leaping into a contracting career, or are considering switching umbrella company, look no further than Churchill Knight Umbrella. We have over 20 years of experience providing compliant accountancy and payroll services to contractors. From the moment you contact us, our expert team will provide support and advice and answer any questions you may have. We’re also proud to be accredited by the FCSA – the UK’s leading professional body committed to ensuring the supply chain of temporary workers is compliant with UK tax law, and operates ethically.

For more information about our service or to begin the registration process, please give our team a call on 01707 871622. Alternatively, you can request a callback for a time that suits you, and one of our consultants will be in touch.