With so many to choose from, comparing umbrella companies can seem like a hassle. Not with Umbrella Supermarket
Since their introduction in 1999, IR35 contract rules have caused quite the stir among the self-employed contracting community. They were originally intended as a method of clamping down on employees in all but name who set up a limited company to circumvent tax rules and pay a reduced rate. However, IR35 has since evolved into a dragnet into which HMRC can sweep virtually all self-employed contractors and force them to pay a higher rate of tax…
This evolution of IR35 over time has not gone unnoticed by those who have seen their income significantly diminished by HMRC repeatedly moving the goalposts, and the scheme has come under consistent criticism by experts in the industry and contractors alike.
In a bid to make the process more transparent and assuage concerns, HMRC introduced its Check Employment Status for Tax tool (CEST) in 2017, though subsequent controversies surrounding the tool have also rendered it liable to reproach.
As such, can be difficult for self-employed contractors to understand fully the rules surrounding IR35 contracts and whether they themselves are deemed to be “inside IR35”. With that in mind, this handy guide aims to provide a short rundown of the exact regulations, as well as providing advice to those who aren’t certain of how to ensure they maximise their earnings without falling foul of the law.
IR35 contract rules were initially introduced just before the turn of the millennium to tackle the rise of people using intermediary limited companies in order to pay a lower rate of tax, while still operating by-and-large as an employee of their end client. Since the client would no longer have to pay national insurance contributions for a contractor, and the contractor themselves could take advantage of the dividends and lower rate of corporate tax afforded to limited companies, it was a win-win arrangement for all involved – except the government.
Aware of the fact that it was missing out on potentially millions of pounds in tax revenue, HMRC introduced IR35 in 1999, which penalised those serving as an employee in all but name. Those found to be manipulating the system were forced to submit to PAYE tax rates, but over the years, the scheme has evolved into something more geared towards maximising the amount of tax paid by legitimate self-employed people, as well.
As of April 2017, HMRC amended the rules surrounding IR35 in the public sector so that the end client was now responsible for determining whether the contractor fell within IR35 contract rules. Wary of penalisation, many of these clients simply blanketed all of their partners as being “inside IR35” or, worse still, ceased trading with them altogether. This meant that thousands of contractors across Britain were left out of pocket. With the rule due to expand to include the private sector in April 2020, the regulations are set to affect countless more people, too.
In this sense, the financial benefits of self-employment will be largely negated, while the risks associated with it will remain. Self-employed individuals have little job security, no pension, no holiday pay, no sick pay and no maternity or paternity leave. It was in recognition of these drawbacks that contractors were encouraged to take advantage of the same breaks afforded to corporate entities through setting up a limited company, as well as serving as an incentive for investing their profits back into the national economy.
With HMRC taking strides to eliminate most of the financial benefits associated with setting up a limited company and working as a self-employed contractor, one possible solution to the problem could be to contract the services of an umbrella company. These firms “hire” contractors to their payroll and treat them as an employee, bypassing the need for IR35 altogether.
As well as sidestepping all of the stress and anxieties associated with trying to work out whether or not your working relationships are deemed as IR35 contracts or not, umbrella companies also offer plenty of other benefits, too. They can handle all of your invoicing, expenses and tax returns for starters, taking a huge burden off your mind. What’s more, as an “employee”, you’ll receive the same statutory benefits outlined above as the rest of the national workforce does.
In exchange for these services, umbrella companies charge a regular fee (normally payable weekly or monthly). Of course, not all umbrella companies are created equal. Some charge higher rates for more comprehensive packages, some offer discounted fees for a more threadbare service, and some fall somewhere in between the two extremes.
With so many to choose from, comparing umbrella companies can seem like a hassle. Not with Umbrella Supermarket. Our umbrella comparison site makes it quick and easy to compare quotes from leading providers, based on your monthly income. Put us to the test today!
Any contractor considering switching to an umbrella company will want to know how to find the best provider to work with.
Although you could spend your precious time and energy searching the web for the best umbrella company, there is an easier way – using an umbrella calculator.
In this guide, Umbrella Supermarket explains why every contractor should use an umbrella calculator in 2021.
If you are considering contracting you will need to decide on PAYE or umbrella.
It can be a difficult decision to make and contractors will inevitably be questioning which option will be the best for them.
To help every contractor get on the right track for them, in this guide Umbrella Supermarket looks at PAYE vs umbrella, outlining the key differences and how this will impact you.
There are many reasons that contractors across the UK opt to work under an umbrella company.
Umbrella companies offer an easy way to contract and remove the need for the contractors to worry about the burdens of admin, finances, tax and IR35, all things that limited company contractors have to deal with.
For this reason, many contractors will be weighing up their options and questioning whether it is worth using an umbrella company in 2021. To help make the decision that little bit easier, Umbrella Supermarket has put together this guide on the pros and cons of using an umbrella company.
Any contractor that is considering operating through an umbrella company in 2021 will need to understand Umbrella Company fees - from why an umbrella company charges fees, how they are paid to how much the contractor will pay.
In this guide, Umbrella Supermarket answers those all-important questions to help every contractor know exactly where they stand when it comes to umbrella company fees.
If you’ve made the decision to contract through an umbrella company in 2021, you will next need to find an umbrella company that’s right for you.
After all, there are lots of umbrella companies out there, so how do you know which one to choose?
To help you find the best umbrella company for you, in this guide Umbrella Supermarket outlines what makes a good umbrella company, so you can rest assured you’re making the right move.
One of the many advantages to operating through an umbrella company for contractors is that they become an employee of their chosen provider.
In turn, this means that the contractor will be automatically enrolled onto the umbrella company’s workplace pension scheme.
To help contractors find out more about umbrella company pensions Umbrella Supermarket has put together this handy guide.
If you are considering contracting through an umbrella company you will naturally have questions and queries over how they work.
After all, making the move to umbrella can be a big step for contractors. To help, in this guide Umbrella Supermarket explains how to get started with an umbrella company and share our top tips for using one in 2021.
PAYE or umbrella is a question asked by every contractor. Which one you opt for will have a big impact on your contracting career and lifestyle. So, it's important to make the right decision for you.
To help makes things a little bit easier, Umbrella Supermarket has put together this guide on PAYE or umbrella, outlining the key differences between each, to help you make the best and most informed decision for you.
One of the many benefits to working through an umbrella company is that you will receive holiday pay as well as a range of other statutory benefits including sick pay, maternity and paternity pay.
To find out more about umbrella company holiday pay, and how to calculate how much you will be entitled to, Umbrella Supermarket has put together this handy guide.
Contractors must make several decisions throughout their contracting careers. One big decision contractors have to make is how they will operate.
One way that contractors can work is through an umbrella company.
Umbrella companies have become an increasingly popular way to contract in the past few years, offering many benefits to the contractor. But, how do you know whether this option is right for you?
To help every contractor make the right decision for them, in this guide, Umbrella Supermarket explains when not to use an umbrella company.
There are tons of benefits to using an umbrella company, which is why they have become such a popular option for contractors in recent years.
After all, an umbrella company takes away the stress and hassle of operating through a limited company whilst offering contractors a range of advantages, such as statutory rights, paying them a salary, deducting correct tax levels and National Insurance, and taking care of tasks like expense processing and invoicing.
However, as more and more contractors opt to use the services of an umbrella company, more providers have started to claim that they are HMRC approved.
To bust the myths around HMRC approved umbrella companies and get straight to the facts, in today's guide Umbrella Supermarket look at whether HMRC approved umbrella companies really exist, so you know exactly where you stand.
If you're considering making the leap to contracting, you will understandably want to know how much you will have to pay in umbrella company costs. After all, this amount comes directly out of the contractor’s pocket, so it’s important to be clued up on how much you should expect to pay.
To help contractors, in this guide Umbrella Supermarket answer the all-important question of how umbrella companies cost in 2021.
