Umbrella companies are a very useful tool that can be used by a number of different types of people. Those who are in roles such as completing contract work, temporary work, intern work, consultancy and freelance work will need to complete their own tax returns and ensure that they are paying the right amount for the various taxes and contributions they must complete.
This can prove to be a time consuming and difficult task, with many people far from experts on the ins and outs of the situation and what they are supposed to be doing and paying. A great way around this is for people to make use of the services of umbrella companies, who can deal with these sorts of things for them and ensure that they are paying the right amount for the various taxes, leaving them safe in the knowledge that it is all being taken care of and that they will not have any unwelcome further charges of fines.
Here, we are going to take a look at some of the different sorts of services that umbrella companies may have on offer for their users and clients.
Any umbrella company based in the UK is classed as an Employment Management Company, meaning that they must operate by the PAYE set of rules. Some of these employment management companies claim to be able to help their clients get more of their money by offering them a greater percentage of their take home pay, but this is simply not the case, and would be illegal if it was true. The real basic service that the umbrella company offers is that being an “employee” of one means that a person will simply pay the same amount of tax and National Insurance as any full time employee would. The regulations and legislation regarding this are the same for everyone, “without exemption”.
CIS (Construction Industry Scheme) services
The Construction Industry Scheme (CIS) sets out the rules for how payments to subcontractors for construction work must be dealt with by the contractors. Although applying mainly to the field of construction, businesses or organisations whose core industry is not construction but still have a high spend in the field may also count and be able to fall under the scheme. For someone to make the most of the services offered with regards to this by umbrella companies, an individual must be registered as being self employed with HMRC (Her Majesty’s Revenue and Customs) with their own unique tax reference. They can then register as a subcontractor under CIS.
Help with mortgages
An interesting and potentially worrying circumstance came about, when lenders realised that their traditional criteria for assessing a mortgage application would mean a large number of contract and freelance staff would have no chance of being successful. So, some umbrella companies now offer the extremely useful service whereby the lenders assess the applications differently, judging them on criteria more specifically relevant to those in the contractor and freelancer community.
This article takes a look at the different sorts of services that can be offered by umbrella companies. The umbrella company can help contractors and other freelance staff in a number of different capacities.
As a freelance journalist, Simon Wells is a regular user of umbrella companies and would highly recommend their services. Simon writes on a whole range of topics, from news and sport to finance and entertainment.